CIMB Group Holdings Berhad: Annual Report 2019

Transcription

1. CIMB GROUP HOLDINGS BERHAD 195601000197 (50841-W) CIMB GROUP HOLDINGS BERHAD ANNUAL REP ORT 2019 PERFORMANCE Strong balance sheet and top line growth across the region Page 18 FORWARD23 Great strides through Group-wide implementation with over 500 strategic projects Page 16 www.cimb.com SUSTAINABILITY Embedded economic, environmental and social considerations into our operations and lending policies Page 17 ANNUAL REPORT 2019 CUSTOMER CENTRICITY TECHNOLOGY & DATA OUR PEOPLE VENTURES & PARTNERSHIPS SUSTAINABILITY ADVANCING CUSTOMERS AND SOCIETY
2. Our covers showcase CIMB 's focus on putting our customers at the heart of everything we do, future-proofing our business and shaping a sustainable future. Through adapting to a dynamic and complex ecosystem, we strive to create value and advance our customers and society. View our Annual Report, Accounts and other information about CIMB Group Holdings Berhad at www.cimb.com
3. Annual Report 2019 We have taken conscious effort to manage and minimise the environmental impact of our annual report and related processes . Printed with eco ink made from higher percentage of vegetable oil to reduce emission of volatile organic compounds (VOCs). Contains low level of chemical, thus less pollution to the environment throughout the printing process. Printed with carbon neutral press machines, eco materials and managed under and certified with ISO14001:2015 environmental management system to minimise environmental impact. The total carbon footprint for the 3 books of CIMB Annual Report 2019 is kgCO2e. We are committed to reducing the environmental impact of our annual report and will continue working to reduce the amount of greenhouse gases (GHG) emitted throughout the entire designing and printing process. 7.495 Paper sourced from responsibly managed forests that provide environmental benefits. Covers are printed on 250gsm Arctic Volume High White (FSC Mix) paper; Inner pages are printed on 100gsm Munken Polar Rough (FSC Mix) paper. There is approximately 25% reduction in paper used, 276,900 less sheets in the printing and production of CIMB Annual Report 2019. Paper and printing wastes are being responsibly handled to recycle and up-cycle materials in order to reduce the burden on landfills.
4. about “In fulfilling our purpose of advancing customers and society, we remain committed to championing growth, with responsibility towards our multiple stakeholders across ASEAN. At CIMB Group, we are cognisant of the need to continuously monitor and respond to the evolving needs and expectations of our employees, customers, suppliers and partners, investors, as well as the regulators and policy-makers. Therefore, our Annual Report is also maturing in terms of our narratives for both shareholders and stakeholders alike. We are going beyond operational efficiencies and financial performance, to speak of our ability and perseverance to create value that is meaningful for everyone. ‘FutureForward’ is our commitment to future-proof our business, our people and our collective ASEAN aspirations.” R E P O R T I N G S C O P E A N D B O U N DA R I E S M AT E R I A L I T Y D E T E R M I N AT I O N This Annual Report covers our financial and non-financial performance during the period 1 January 2019 to 31 December 2019. All our Annual Reports present a balanced and accessible assessment of our strategy, performance, governance and prospects. Through this report, it is our sincere effort to keep our stakeholders abreast of key developments; programmes and initiatives; market challenges and business solutions; our achievements; mid- to long-term direction; and the overall health of operations in 2019 in various geographical markets where we operate. The various issues and developments included in the 2019 edition were determined by a range of considerations, such as quantitative and qualitative criteria; issues likely to impact our ability to achieve strategic objectives and remain sustainable; matters covered in reports presented to our Board of Directors; the risks identified by our risk management team; and the interests of our key stakeholders. We also consider factors that affect the economic and social environment in various countries and regions where we conduct business. The report also presents rich insights and forward-looking statements on financial position and performance in the year ahead. Our report is particularly relevant for our stakeholders in the ASEAN markets of Malaysia, Indonesia, Singapore, Thailand, Brunei, Cambodia, Myanmar, Vietnam and Laos. A range of other stakeholders across the globe will also find our report informative. Our financial statements are independently audited and provide in-depth and transparent disclosure of our financial performance. Unless we indicate otherwise, all the data presented relates to the Group, which includes our banking operations and our subsidiaries. In preparing our report, we were guided by the requirements of local and international statutory and reporting frameworks, including those of Bursa Malaysia. S TAT E M E N T O F T H E B OA R D O F D I R E C T O R S O F CIMB GROUP HOLDINGS BERHAD The Board acknowledges its responsibility to ensure the integrity of the Annual Report. In the Board’s opinion, the report addresses all material issues and matters and fairly presents the Group’s performance for the year 2019. Approved by the Board of Directors and signed on behalf of the Board: Datuk Mohd Nasir Ahmad Tengku Zafrul Chairman Tengku Abdul Aziz Group Chief Executive Officer/ Executive Director
5. CIMB GROUP HOLDINGS BERHAD View our Annual Report , Accounts and other information about CIMB Group Holdings Berhad at www.cimb.com   what’s inside this report 2 About This Report PERFORMANCE REVIEW STRUCTURE & LEADERSHIP 68 Board of Directors 70 Board of Directors Profile 74 Group Company Secretary’s Profile 75 Corporate Structure 4 Message from the Chairman OVERVIEW OF CIMB GROUP 9 Overview 10 Profile and Presence 11 12 32 Group Financial Review by Group CFO 38 Five-Year Group Financial Summary 39 Five-Year Group Financial Highlights 11 Business Highlights 40 Simplified Group Statements of Financial Position 11 Financial Highlights 41 Key Highlights of 2019 Corporate Milestones and Our Rich Heritage MANAGEMENT DISCUSSION AND ANALYSIS STRATEGIC REVIEW Quarterly Financial Performance 42 Key Interest Bearing Assets and Liabilities 43 Value Added Statements 44 Capital Management 45 Credit Ratings 48 Balance Sheet Management 49 Investor Relations 55 Financial Calendar 14 Group CEO’s Overview 24 Economic and Banking Review & Outlook 26 Material Matters Impacting Our Strategy 27 Key Risks and Mitigation 28 The Group’s Strategy BUSINESS REVIEW 56 Group Consumer Banking 58 Group Commercial Banking 60 Group Wholesale Banking 62 Group Transaction Banking 64 Group Ventures & Partnerships 66 Group Islamic Banking 76 Board of Major Subsidiaries 78 Group Shariah Committee 79 Group Shariah Committee Profile 82 Group Management 84 Group Management Profile 89 Human Capital Development 99 Group Organisation Structure CORPORATE GOVERNANCE 100 Chairman’s Statement on Corporate Governance 101 Corporate Governance Overview Statement 117 Additional Disclosures 120 Statement on Risk Management and Internal Control 129 Risk Management 137 Audit Committee Report 142 Board Shariah Committee Report SUSTAINABILITY STATEMENT 144 Sustainability Statement HIGHLIGHTS AND ACHIEVEMENTS 163 Regional Notable Deal 167 Notable Achievements 168 Corporate Event Highlights 170 Media Highlights STAKEHOLDER INFORMATION 172 Shareholders’ Statistics 175 Internal Policies, Procedures and Guidelines 181 Top 10 Properties of CIMB Group 182 Corporate Information 184 Group Corporate Directory 2019
6. DATU K MOH D NASIR AHMAD Chairman D E A R S T A K E H O L D E R S , 2019 marked the completion of my one-full financial year as Chairman of CIMB Group. It was momentous for two reasons. First, the operating environment only grew more challenging, with evolving policy focus, regulations, socio-economic trends, and global trade relations. In a way, it gave us (and the industry) a new impetus and motivation to innovate and look at banking of the future. Second, it was the beginning of our five-year (mid-term) strategic roadmap Forward23. The task at hand was not just to devise a game-plan to remain relevant and profitable, but to demonstrate greater responsibility towards managing and growing out of the emerging risks in the coming years. It was an exciting start and I reckon that every member of CIMB Group left no stone unturned to ensure 2019 was a year of consolidation (of our strengths) and to define and deliver value for our multiple stakeholders. 4
7. the chairman “Despite the US-China trade tensions, steady domestic demand, private consumption and investments provided ASEAN some immunity against various uncertainties arising from global conflicts. The banking sector remained resilient, while preparing to transition to a digitally matured environment, where data analytics and advanced technologies continued to enable banks towards cutting-edge customer solutions. However, global impacts from climate change, with increasing expectations of institutional investors and other stakeholders, banks have started to examine various economic, environmental and social risks in their credit assessments. In the first year of its new mid-term strategy Forward23 (2019-2023), CIMB is on track in meeting the milestones that are set in Forward23 and has also demonstrated leadership by making absolute global commitments to sustainable development and sustainable banking.” 5
8. message from the chairman THE YEAR THAT ENDED Overall , the year was eventful. Regulators continued in their last leg of implementation of Basel IV and MiFID II prudential reforms, in addition to propagating robust risk management practices and internal controls. The Trumpian uncertainty definitely affected and remains a sore point for the markets that are trade-reliant. We also saw the conflicts that came with growing protectionism on one hand and the risk of instability while open markets strived to strengthen crossborder partnerships to promote trade. The Fourth Industrial Revolution and Sustainability Leadership were the two recurring themes that necessitated the need to future-proof banks and the communities that depend on them, by optimising their potential and reinventing their business models. In the ASEAN, actors continued to accelerate efforts towards financial integration in the region by balancing liberalisation initiatives with financial inclusiveness and stability. This also means the right balance of policy mix and digital infrastructure. While the intensifying ASEAN integration efforts in 2019 seemed to bring the vision of one-big regional market closer to reality, the probable competition from nontraditional banking institutions has also been an issue of debate. In our home market, Bank Negara Malaysia (BNM) issued the exposure draft for the licensing framework for virtual banks. It has set a minimum capital fund unimpaired by losses of RM100 million, which would be gradually increased to RM300 million. The new-age digital banks are expected to increase access to convenient and affordable financial solutions. The dynamics will be different. There may be new challenges to digital. The priority, however, will be to drive value to customers and safeguard their interests. Moving forward, we will witness a sea of change. Banking sector will evolve. The operating landscape will present huge opportunities, but not without new risks. Responsible banking practices may seem to be a tall order, but will become a norm. The future of banking will take a new form and shape, with fast changing demographics, high expectations of stakeholders, cautious investor sentiments, and extraneous factors such as climate emergency and socio-economic and political uncertainties. CIMB is well-positioned in the region with its Forward23 strategic roadmap and will demonstrate resiliency and leadership for delivering positive performance year on year. A lovely evening at Majlis Berbuka Puasa CIMB Group. 6 GOVERNANCE AT ITS BEST The role of Boards becomes even more critical as the banking sector is undergoing a huge transformation. All members on the Board must have the right-level of competencies to not only understand but also assess the various emerging risks in the conduct of business. The Board is steadfast in its commitment to observe the highest standards of governance in its effort to remain relevant against a backdrop of challenging business landscape. During the year, we conducted several sessions for the Board of Directors on Sustainability – emphasising on physical and transition risks and how CIMB Group can improve its preparedness into the future. These awareness sessions helped the Board members acknowledge interlinkages between risks, various capital inputs (manufactured, intellectual, financial, social and relationship, human, and natural) and the organisational performance. Following this, in 2019, we have included sustainability metrics as part of selected Senior Management’s Performance Measurement System. This also means the Board members are now expected to steer sustainability direction, while generating shareholder’ returns. This will require them to have an oversight on forward-looking risks and ensure appropriate governance toward value creation for multiple stakeholders to our business.
9. SUSTAINABILITY FOR GROWTH During the year , we have made sterling progress on all fronts. We have not only made global commitments to scale-up finance for sustainable development, but have pledged to leverage on our influence and the impact of our networks to promote sustainable business practices. We have launched Sustainable Development Goals (SDG) Bonds, Sustainability-Linked Loans and SME Renewable Energy Financing – all in our efforts to create a better future, and a better planet. We encourage our people to propose their ideas to contribute in CIMB’s sustainability efforts. We believe sustainability starts from home and the simple steps we have taken are proven to provide PEOPLE AS CHAMPIONS I take pride in the untiring efforts of our senior management and #teamCIMB in championing meaningful growth. And growth has many contexts in CIMB. Financial growth that will catalyse CIMB’s journey into the future as a formidable universal bank in the region. Intellectual growth that will shape new highly-capable leaders of tomorrow. Personal growth that will inspire us CIMBians to take pride in what we do, and all that we represent as a leading credible bank. better awareness on this movement. From reducing waste to managing events in a more sustainable manner, we aspire to create a culture with a sense of responsibility towards our environment and society. In fulfilling our purpose of advancing customers and society, we have embarked on our sustainability journey on a strong footing. As we move forward, we will only accelerate our efforts towards responsible banking practices. We remain committed to do everything in our capacity, together with our partners and CIMBians to create net positive impact on the environment and the communities where we operate. It is no surprise that our group-wide efforts had bagged us many awards of excellence. A worthy mention would be that CIMB won the Most Outstanding Annual Report of the Year (Platinum) by National Annual Corporate Report Awards (NACRA) 2019, Sustainability Reporting Award (Gold) by NACRA 2019, and Best Retail Bank in Malaysia by the Asian Banker Excellence in Retail Financial Services Awards 2019. All of these could not have been achieved without hard work, dedication, and high spirits from #teamCIMB. As we move forward, growth is imminent. Risks to growth are inevitable. Future-proof strategies are critical. Responsibility is a pre-condition to everything. And people are the champions, the catalysts to all growth. Therefore, at CIMB, it is our utmost priority to keep our people engaged and motivated at all times. I strongly believe that our people are our partners in growth. We encourage them to participate in our journey, co-opt and co create ideas, programmes, and solutions, which will give us not just a competitive advantage but a differentiated positioning in the eyes of our stakeholders. We uphold our CHIDA values dearly in our pursuit of creating a better CIMB. Customer Obsessed, High Performance, Integrity, Diversity & Inclusion and Agility are the ingredients that reflect our commitment towards enabling our customers to achieve their dreams, goals and aspirations. Leadership engagement session at INSEAD Singapore Campus. 7
10. message from the chairman FUTURE FORWARD As a big brand , we must be prepared to face all challenges in the future. We must grow and progress responsibly. I cannot emphasize enough how serious we are in upholding integrity which is the pillar of good governance. We do not tolerate corrupt practices. Guided by the MACC Act 2018, CIMB has put in place adequate procedures which include Anti-Bribery and Corruption Policy, No Gift Policy, Whistleblowing-Policy, and other related policies and procedures. Business success is very much dependent on good corporate governance. The Board is very mindful of the need to consistently ensure that overall best practices are in place. As announced by BNM, CIMB has been identified as one of the Domestic Systematically Important Banks (D-SIBs). The D-SIBs Framework that will come into effect on 31 January 2021 plans to mitigate the “too-big-to-fail” challenges by having to maintain higher capital buffers to meet regulatory requirements. This signifies the need for a heightened effort to ensure CIMB continues to be a strong and significant component of the financial system of the country. This is a responsibility that CIMB will be proud to shoulder. At the Group Annual Management Summit in November 2019. FINAL REMARKS Before concluding I would like to take this opportunity to express my gratitude to the Board Member who has stepped down, Mrs. Tongurai Limpiti, for her services to the Board of CIMB Group. To my colleagues on the Board and the subsidiary Boards, I am thankful for your invaluable guidance, outstanding services and far-sighted visions. On behalf of the Board, I would also like to record my appreciation to our stakeholders, business partners, customers, suppliers, and regulators for the unshaken confidence and support over the years. Hosted The Cooler Earth Sustainable Finance Summit in October 2019. Special thanks go to #teamCIMB for their tireless commitment and hard work, and the CIMB Management led by the Group CEO, Tengku Dato’ Sri Zafrul Tengku Abdul Aziz for steering the Group towards becoming a high-performance organisation. 2020 starts a new decade. Let us keep our spirits high and continue developing a highly skilled, talented and united #teamCIMB. Members of the Board of CIMB Cambodia paid a courtesy visit to His Excellency Chea Chanto (fourth from the right), the Governor of the National Bank of Cambodia. 8 Datuk Mohd Nasir Ahmad Chairman
11. overview A DVA N C I N G CU S TO M E R S A N D S O C I E T Y OUR PURPOSE STATEMENT We place our customers at the heart of everything we do . The 4th Industrial Revolution is upon us and as we strive to be the disruptor and not the disrupted, we will not limit ourselves to the boundaries of banking as we know it today. We advocate sustainable practices, both for ourselves as an organisation and our customers as we progress forward. CUSTOMER OBSESSED OUR VALUES We are here for our customers, to ensure they’re happy and satisfied. HIGH PERFORMANCE We always strive to go above and beyond in everything we do. INTEGRITY We’re always honest, responsible and accountable in everything we do. Be vigilant, be alert, be thorough. AGILITY DIVERSITY AND INCLUSION We must respond quickly to change and be problem solvers. We believe everyone has something to contribute, regardless of race, gender or opinions. CIMB is a leading ASEAN universal bank, one of the largest investment banks in Asia and one of the largest Islamic banks in the world. T O T A L A S S E T S RM573.2 billion CIMB SHARE INFORMATION M A R K E T C A P I T A L I S A T I O N RM51.1 billion N E T P R O F I T RM4.56 billion COMPANY NAME STOCK NAME STOCK CODE CIMB GROUP HOLDINGS BERHAD CIMB 1023 (Bursa Malaysia) TICKER CODE FINANCIAL YEAR END SHARE REGISTRAR CIMB: MK (Bloomberg) CIMB.KL (Reuters) BOARDROOM SHARE REGISTRARS SDN. BHD. (199601006647 (378993-D) 31 DECEMBER 11th Floor, Menara Symphony No. 5 Jalan Prof. Khoo Kay Kim Seksyen 13, 46200 Petaling Jaya Selangor, Malaysia 9
12. profile CIMB Group is a leading ASEAN universal bank and one of the region ’s foremost corporate advisors. It is also a world leader in Islamic finance. and services. It is the fifth largest banking group by assets in ASEAN and, as at the end of 2019, had around 35,000 staff and over 15 million customers. The Group is headquartered in Kuala Lumpur, Malaysia, and offers consumer banking, commercial banking, wholesale banking, Islamic banking, wealth management and digital payment products CIMB Group Holdings Berhad has been listed on the Main Market of Bursa Malaysia since 1987 and has market capitalisation of RM51.1 billion as at 31 December 2019. Total assets at the end of 2019 were ASEAN MARKETS RM573.2 billion, with total shareholders’ funds of RM56.2 billion and total Islamic assets of RM133.5 billion. At the end of 2019, the substantial shareholders were Khazanah Nasional Berhad with 23.77%, Employees Provident Fund with 12.67%, Permodalan Nasional Berhad with 12.20% and Kumpulan Wang Persaraan (Diperbadankan) with 5.90%. 15 • Malaysia • Indonesia • Thailand • Singapore • Cambodia • Laos • Brunei • Vietnam • Myanmar • Philippines Countries 702 Retail Branches OTHER MARKETS • China & Hong Kong • United Kingdom • India* • Korea* • United States of America* Around 35 k Staff * Via CGS-CIMB Joint Venture   CIMB BANK CIMB Bank is the Group’s commercial bank in Malaysia with 234 branches across the country. It has subsidiaries in Thailand, Cambodia and Vietnam, as well as branches in Singapore, Philippines, London, Hong Kong, Shanghai and Laos and representative offices in Yangon and Mumbai.   CIMB NIAGA CIMB Niaga is the Group’s banking franchise in Indonesia with 376 branches across the archipelago. It has been listed on the Indonesia Stock Exchange since 1989 and is the sixth largest bank in Indonesia by assets at the end of 2019.   CIMB INVESTMENT BANK CIMB is the Group’s investment banking franchise which operates in 15 countries across Asia Pacific. CGS-CIMB Securities, a joint-venture with China Galaxy International, is the stockbroking arm for the Group providing institutional and retail equity broking services and equities research.   CIMB THAI BANK CIMB Thai is the Group’s banking franchise in Thailand. It has been listed on the Stock Exchange of Thailand and is the seventh largest commercial bank in Thailand by assets, with 69 branches nationwide and one overseas branch in Vientiane, Laos.   CIMB ISLAMIC CIMB Islamic is the Group’s Islamic banking and financial services franchise, with an extensive suite of innovative Shariah-compliant products and services. It operates in parallel with the Group’s universal banking platform. 10   CIMB BANK PLC CIMB Cambodia is the Group’s banking franchise in Cambodia, with 14 branches across the country. It offers a wide range of banking products and services for individuals, businesses and corporates.   CIMB BANK VIETNAM CIMB Bank (Vietnam) Limited is the Group’s banking franchise in Vietnam. Headquartered in Hanoi and with a branch in Ho Chin Minh City, it offers a wide range of banking products and services for individuals, businesses and corporates.   CIMB BANK PHILIPPINES CIMB Bank Philippines was launched in 2018 and is recognised as a leading digital banking franchise in ASEAN. The all-digital mobile-first retail banking proposition scaled rapidly to 1.7 million customers in its first year of operations.
13. key highlights BUSINESS HIGHLIGHTS FORWARD23 TECHNOLOGY & DATA SUSTAINABILITY 2019 was the first year into our five-year Forward23 journey. Our focus during the year has been to establish a governance framework to ensure portfolio oversight and delivery of the set objectives. We have made great strides through Group-wide implementation of 21 programmes and over 500 projects. In response to rapid digitalisation, the evolving technology landscape, as well as the growing expectations of a new generation of digital-savvy customers, the Group focussed on enhancing the core resiliency of our systems as well as to develop innovative new products and solutions to future proof ourselves. In keeping with our sustainability agenda, we embedded economic, environmental and social (EES) considerations into our operations and lending policies. In addition to rolling out our Group Sustainability and Sustainable Financing Policies, we also made global commitments and delivered sustainable product solutions locally. Refer to Group CEO’s Overview page 17. Refer to Group CEO’s Overview page 16. Refer to Group CEO’s Overview page 17. PEOPLE DEVELOPMENT In preparing our workforce for the Fourth Industrial Revolution, we invested in upskilling over 2,200 employees in the 3D related skills of data, digital, and design. We also developed a roadmap to accelerate towards achieving a 2023 target of at least 30% of 3D talent in #teamCIMB. Refer to Group CEO’s Overview page 17. CUSTOMER CENTRICITY VENTURES & PARTNERSHIPS To strengthen our customer centricity, we set-up our Transforming Customer Journeys (TCJ) department. The objective is to take a fresh approach to designing the end-to-end journey for our customers within an agile design and delivery ecosystem. We also made NPS our key headline target for Forward23. As a young business division setup in 2019, the aspiration is to develop the Group’s new and disruptive businesses and value creation streams. During the year, we successfully established baseline narratives across our practices and started identifying disruptive levers to accelerate over the next 5 years. Refer to Group Ventures & Partnerships page 64. Refer to Group CEO’s Overview page 16. FINANCIAL HIGHLIGHTS OPERATING INCOME RM17.8 ROE 8.5 % billion GROSS LOANS RM369 billion DEPOSITS FROM CUSTOMERS^ RM402 billion TOTAL ASSETS RM573.2 NET PROFIT billion TOTAL CAPITAL RATIO 16.8 % RM4.56 billion GROSS DIVIDEND PER SHARE 26 sen ^ Include investment accounts of customers and structured investments classified as financial liabilities designated at fair value through profit or loss and other liabilities 11
14. corporate milestones 1974 Pertanian Baring Sanwa Multinational Bank (PBSM) established in Kuala Lumpur and launched by Prime Minister Tun Abdul Razak Hussein. 1986 PBSM changes name to Commerce International Merchant Bankers Berhad (CIMB) after acquisition by Bank of Commerce. 1991 1999 1987 2003 CIMB lists on Bursa Malaysia. The listing lasts only three years and delivers returns of 340% to shareholders. 2005 CIMB acquires GK Goh Securities in Singapore. In a major corporate restructure to create a universal bank, CIMB acquires sister company Bumiputra-Commerce Bank from holding company CAHB. Holding company CAHB is renamed Bumiputra-Commerce Holdings Berhad. 2006 CIMB acquires Southern Bank. The new-look CIMB Group launches in the presence of the Malaysian Prime Minister Dato’ Sri Abdullah Ahmad Badawi. 2008 CIMB Niaga established through a merger between Bank Niaga and Bank Lippo. CIMB Group acquires BankThai and the following year renames it CIMB Thai. Bank of Commerce (Malaysia) Berhad merges with Bank Bumiputra Malaysia Berhad to form Bumiputra-Commerce Bank Berhad. Bank of Commerce successfully lists on Bursa Malaysia. 2002 12 Bank of Commerce merges with United Asian Bank. In a major restructure, the merged banks become Bank of Commerce (Malaysia) Berhad, under holding company Commerce-Asset Holding Berhad (CAHB). CIMB becomes a separate CAHB subsidiary. CAHB takes a majority stake in Indonesia’s PT Bank Niaga Tbk.
15. 2009 CIMB Group launches retail banking operations in Singapore . CIMB Group acquires a 19.99% stake in the Bank of Yingkou, China. Holding company BCHB is renamed as CIMB Group Holdings Berhad. 2010 CIMB Group launches banking operations in Cambodia, bringing retail banking presence to five ASEAN nations – Malaysia, Indonesia, Singapore, Thailand and Cambodia. 2012 2013 CIMB Group starts the acquisition of most of the Asia Pacific cash equities and associated investment banking businesses of the Royal Bank of Scotland, and expands or adds operations in Sydney, Melbourne, Hong Kong, London and New York. CIMB Group acquires SICCO Securities, a Thai stock-broking company. CIMB Group completes its Asia Pacific investment banking platform with new operations in Taiwan and India and Korea. The Group moves into its new 40-storey headquarters in Menara CIMB, located at the high-tech hub of Kuala Lumpur Sentral. 2016 CIMB opens its first branch in Vietnam. This 100% owned subsidiary allows CIMB to establish its presence in the country as a universal banking platform and strengthen its banking franchise in ASEAN. 2017 CIMB and China Galaxy Securities Group become 50:50 shareholders in CIMB Securities International Pte, Ltd., repositioning CIMB’s stockbroking business as a pure play broker with the client base of a universal ASEAN bank. 2019 CIMB Group, as a Founding Member of the United Nations Environment Programme Finance Initiative Principles for Responsible Banking (PRB), makes a public commitment to mobilise and influence its networks towards sustainable business and lifestyle practices. The Group launches a 5-year sustainability roadmap to realise CIMB's priority UN Sustainable Development Goals and held our inaugural The Cooler Earth Sustainability Summit 2019. 2018 CIMB received approvals from the Bangko Sentral Ng Pilipinas (BSP) to establish and operate its banking business in the Philippines. With these approvals, CIMB Bank Philippines Inc, launched its digital retail banking business in December 2018 establishing CIMB’s presence in all 10 ASEAN countries. 13
16. group CEO ’s TE NG KU DATO’ S RI Z A FRUL TENGKU ABDUL AZIZ Group Chief Executive Officer D E A R S H A R E H O L D E R S , In our previous annual report, I described 2018 as “a rollercoaster year”. In contrast, while 2019 displayed an easing of negative sentiments, uncertainty was still a prevailing theme. Notably, US and China remained antagonistic in their trade war with no clear resolution in sight, while interest rate cuts by the central banks of several ASEAN countries led to a compression of margins in the financial sectors of the affected countries. As a financial institution with a presence in all 10 ASEAN countries, CIMB was not spared from these macroeconomic tensions. However, despite these headwinds, the Group was able to weather the uncertainties and meet our key 2019 targets, thanks to the focus and the collective effort of #teamCIMB to deliver nothing but excellence. This outcome would not have been possible without the relentless support of our key stakeholders – the Chairman and the board, our regulators, our customers, and you, our shareholders. 2019 was also the year we launched our Forward23 mid-term growth strategy centred on five strategic pivots, namely Customer Centricity, Sustainability, Ventures & Partnerships, Technology & Data, and our People. With the completion of the first year of Forward23, the Group will maintain our momentum and look forward to the successful delivery of all our mid-term growth targets, in spite of the uncertain outlook due to the ongoing COVID-19 outbreak, as well as other socio-political and macroeconomic challenges. 14
17. THE YEAR IN REVIEW In many respects , 2019 saw a protraction of the geopolitical and economic uncertainties that weighed down the preceding year. The US-China trade war involving the two largest economies in the world and ASEAN’s largest trade partners, showed no signs of abating. In January 2020, these tensions were temporarily put on hold as the two countries signed a “Phase One” trade deal, but not before the standoff had already disrupted supply chains and capital markets worldwide. On the European front, multiple rounds of negotiations and a change in the UK Prime Minister culminated in the Brexit withdrawal agreement being signed on 24 January 2020, with talks due to begin over the future relationship between the UK and the EU. These ongoing uncertainties have stalled many major economic decisions, resulting in a global slowdown. A little closer to home, interest rate cuts by the central banks of our three largest markets – Malaysia, Indonesia, and Thailand, with a joint GDP of over USD2 trillion – had a direct impact on CIMB’s 2019 revenues. Combined with additional investment spend to future proof the organisation, the Group missed our cost-to-income ratio (CIR) target; 53.4% on a business-as-usual (BAU*) basis against a target of 52.6%. Despite these challenges, we were able to meet all our other key 2019 targets. ROE came in at 9.3%, which was within target. We also ended the year better capitalised with a Common Equity Tier 1 (CET1) ratio of 12.9%, up from 12.5% in 2018. Meanwhile, gross loans grew 6.7% year-on-year (YoY), outperforming the industry in Malaysia, Singapore and Thailand. These results are indeed a testament to the Group’s resiliency in the face of external pressures and proof positive that our Forward23 strategy is already bearing fruit. * BAU basis: Excluding FY18 gain from the sale of CPAM and CPIAM of RM928 million, as well as excluding FY19 transformational costs (net of tax) of RM270 million, impairment and write off of intangible assets of RM277 million, and tax and MI of RM92 million. 15
18. group CEO ’s overview With the Chairmen and Board of Directors of CIMB related companies at the 2019 Regional Directors’ Sharing Session. F O R WA R D 2 3 CIMB has now started our second year of the five-year Forward23 journey. Our focus for the first year was to establish a governance framework to ensure portfolio oversight and delivery of Forward23. By the end of 2019, we defined 21 programmes throughout the Group, with over 500 projects launched across multiple geographies and divisions. We have made some great strides, which I will summarise in terms of the five strategic pivots that drive our Forward23 plan. CUSTOMER CENTRICITY In our efforts to become a more customer-centric organisation, we set up our Transforming Customer Journeys (TCJ) department in 2019. TCJ is tasked to take a fresh approach to designing the end-to-end journey for our customers within an agile design and delivery ecosystem. To date, the TCJ team has worked on several high priority customer journeys, including Commercial lending, Consumer deposits as well as auto finance in Malaysia and Indonesia. In addition, the Group continues to improve upon the robustness of tracking and monitoring customer experience metrics, via customer satisfaction score (CSAT) and net promoter score (NPS). Furthermore, we have made NPS a key headline target for Forward23, underscoring our aspiration to be a company that is truly obsessed about our customers. 16 FY19 FY19 Target* 9.3% 9.0-9.5% ✔ Dividend Payout Ratio 50.9% 40-60% ✔ Total Loan Growth 6.7% 6.0% ✔ Loan Loss Charge 0.44% 0.40-0.50% ✔ CET1 (CIMB Group) 12.9% >12.0% ✔ Cost-to-income 53.4% Flat (52.6%) ✘ Actual vs Targets ROE Notes: * Excludes transformational cost (net of tax) of RM270 million; Impairment and write off of intangible assets of RM277 million and Tax and MI of RM92 million
19. SUSTAINABILITY Last year , we increased our focus on sustainability initiatives throughout the Group. Out of the 17 UN Sustainable Development Goals (SDGs), we prioritised seven against which we will map our programmes, performance measures, and net impact. To embed an economic, environmental, and social (EES) lens into our operations and lending policies, we rolled out our Group Sustainability Policy and Sustainable Finance Policy. Notably, we also hosted The Cooler Earth Summit, CIMB’s inaugural sustainability conference which attracted 1,200 participants, as well as launched a US$680-million SDG bond, the first in international capital markets by an ASEAN issuer. Additionally, we introduced a variety of attractively-priced green products such as auto finance for hybrid vehicles, mortgages for Green Building Index or GBIcertified homes, and Renewable Energy Financing for MSMEs (micro, small, and medium enterprises). Through these efforts and more, CIMB’s rank on the Dow Jones Sustainability Index (DJSI) – which rates companies in terms of environmental, social, and governance (ESG) practices – rose from the 19th to the 51st percentile in 2019, well on our way of achieving our aspiration of 75th percentile by 2023. VENTURES & PARTNERSHIPS One of the immediate actions of Forward23 was the setting up of a new business division, namely Group Ventures & Partnerships. With regards to partnerships, we opened new revenue streams through products such as merchant financing within the Lazada and Shopee platforms in Malaysia, with plans to scale throughout the region. Meanwhile, the Touch n’ Go (TnG) eWallet – an offering from our TnG Digital joint venture with Ant Financial – is now Malaysia’s largest eWallet, with over 6.8 million registered users and 120,000 merchants onboarded by the end of 2019. Meanwhile, CIMB Philippines acquired over 1.7 million users in its first year of operation, making it one of the fastest growing banks in ASEAN. It is also recognised as the strongest standalone digital bank in the Philippines, clinching the Best Digital Bank awards from The Asian Banker and also Global Finance. Our Vietnam outfit, on the other hand, had completed its Phase 1 recalibration, pivoting towards becoming a pure digital bank. Participated in a panel session at CIMB’s inaugural The Cooler Earth Summit which attracted 1,200 participants. OUR PEOPLE Thus far, over 2,200 employees across the Group had been trained in the 3D related skills of data, digital, and design. A roadmap was also developed to accelerate this journey, setting us firmly on the path of achieving a 2023 target of having at least 30% of 3D talent in #teamCIMB; this was revised upwards from 15% initially as we recognised the importance of having a workforce that is prepared for the Fourth Industrial Revolution. The Group also refreshed our corporate values to align with our Forward23 priorities, the values of which are being Customer obsessed, having a High performance attitude, displaying Integrity at all times, championing Diversity and inclusion, and adapting to changes with Agility, or CHIDA for short. TECHNOLOGY & DATA To keep pace with today’s rapidly digitalising business landscape, financial institutions must invest in technology. In 2019, the Group focussed on enhancing the core resiliency of our systems as well as to develop innovative new products and solutions to future proof ourselves. In particular, our Indonesian and Thailand offerings went from strength to strength this year, with CIMB Niaga’s Go Mobile being awarded “Best Mobile App” for the second year running by The Asian Banker. In Malaysia, we rolled out our enhanced Clicks mobile banking application and also successfully concluded our 1Platform refresh. In addition, the Group Technology division completed a baselining exercise for Malaysia, taking stock of our technology environment to subsequently develop a comprehensive roadmap for remediation and modernisation. This initiative is currently ongoing in Thailand, Singapore, Indonesia, and Cambodia. Serving Nacho snacks to #teamCIMB during Staff Appreciation Day, a day to celebrate the contribution and perseverance of colleagues in CIMB. 17
20. group CEO ’s overview FINANCIAL PERFORMANCE The Group performed well in 2019, reporting a BAU operating income of RM17.8 billion for the year, a respectable 8.2% YoY growth on the back of improved non-interest income (NOII) which was 12.9% higher YoY due to improved trading activity and 6.3% increase in net interest income (NII) mainly driven by 6.7% loan growth. Operating expenses increased 9.8% YoY mainly from investments across all businesses as well as incremental Forward23 expenses, resulting in a CIR ratio of 53.4%. Excluding these incremental investment costs, CIR would have been 50.3%. Asset quality remains sound with a full year loan loss charge coming in at 0.44%, within the FY19 target. Nevertheless, despite the unfavourable market conditions, the Group was able to report a PBT growth of 5.5% YoY. This enabled us to achieve an ROE of 9.3%, within the target for 2019. CET1 ratio improved to 12.9% (c.f. 12.5% in 2018), while net earnings per share (EPS) was 51.7 sen. The Group’s balance sheet strengthened as gross loans increased by 6.7% YoY, outgrowing the Malaysian, Thai and Singaporean markets. Meanwhile, deposits were 5.8% higher YoY with the Group’s CASA ratio improving to 34.4%. Below is a snapshot of the yearly financial performance for the years ended 2015 to 2019, as well as loans performance by country: Yearly Earnings Trend (RM’billion) 9.8% 8.0% 6.8% 17.6 16.1 15.4 4.6 3.4 2015 (BAU) 4.9 9.6% 3.6 2016 Operating income 2017 PBT 4.5 Singapore 8% Thailand 10% Others 5% Malaysia 60% 31 December 2019# RM369.5 billion Indonesia 17% 9.3% 17.8 16.5 6.1 Loans by Country 6.3 4.7 2018 (BAU) Net profit 6.6 5.0 2019 (BAU) ROE Notes: 2015: E xcluding IB restructuring cost (RM202 million); Excluding MY MSS cost (RM316 million) and tax on MY MSS (RM79 million); Excluding ID MSS cost (RM166 million) and tax and MI on ID MSS (RM44 million) 2018: Excludes CPAM & CPIAM gain (RM928 million) 2019: E xcludes transformational cost (net of tax) of RM270 million; Impairment and write off of intangible assets of RM277 million and Tax and MI of RM92 million Loan Growth by Country Loan Growth by Country YoY~ Malaysia +6.0% +6.1% Thailand ^ Indonesia +3.0% Singapore^ +3.7% ^ Others* +21.9% Group~ +5.5% Notes: ~ Excluding FX fluctuations ^ In local currency #Based on geographical location of counterparty *Including London, Cambodia, Vietnam, Philippines, Hong Kong & Shanghai Chairing the CIMB Niaga’s Annual General Meeting in Jakarta, Indonesia. 18
21. Giving a presentation at Bank Negara Malaysia ’s MyFintech Week conference. S E G M E N TA L P E R F O R M A N C E Consumer banking PBT declined 26.3% YoY from a combination of factors. Firstly, although loans grew by 9%, net interest income (NII) was affected by NIM compression from the rate cut in Malaysia. 2019 also saw lower bancassurance fees, higher costs, as well as higher provisions due to MFRS9 adjustments and normalisation of Malaysia provisions. Our Consumer business continues to be the largest contributor to Group PBT, at 30%. Commercial banking grew for the second year running, recording 87.1% YoY PBT growth. Malaysia continued to record double digit loan growth (+12.9%), but the segment remained challenging in Indonesia, Singapore, and Thailand. Commercial NOII was buoyed by the NPL sale in Niaga, while provisions fell as asset quality improved, on the back of MFRS9 writebacks and better underlying provisions for the year. Our Wholesale banking business grew well in 2019 with NII driven by a healthy loan growth of 7.2% YoY and stronger NOII from Treasury & Markets and trading income. PBT increased by 5.1% YoY, dampened considerably by provisions in Indonesia. Wholesale deposit base also grew by 4.5% in 2019. Group Transaction banking registered a healthy revenue growth of 5% YoY, driven mainly by Malaysia and Singapore. Across the region, 2019 saw double-digit growth of 17% YoY in the number of active e-banking clients, thanks to rapid advancements in the digital space. In 2019, Group Ventures, Partnerships and Funding (GVPF) grew 22.0% mainly from the higher returns from the Group’s fixed income portfolio. We invested considerably into TnG Digital, the Philippines, and Vietnam. Meanwhile, through our stake in Principal Asset Management, assets under management (AUM) in the public markets continued to grow healthily, registering a strong 12.5% increase YoY, to end the year with an AUM in excess of RM88 billion. Our Islamic banking business continued to shine, with a YoY PBT growth of 25.6%, resulting in a PBT of RM1.6 billion. This was driven mainly by our Islamic-first initiative in Malaysia and Indonesia, with the largest contribution from the Wholesale segment (38.1% of Islamic PBT) which grew 38.9% YoY. C O U N T RY P E R F O R M A N C E Our Malaysian operations performed well on a BAU basis with PBT improving 8.0% in 2019, driven by strong loan growth of 6.0%, better trading income, as well as the gain from the sale of our Malaysian equities business. As a result, Malaysia’s contribution to Group PBT increased to 69% (c.f. 67% in 2018). Indonesia saw its PBT decline by 20.2% YoY, largely due to higher Corporate provisions. The sale of Niaga NPLs in 3Q19 dampened the decline somewhat. 19
22. group CEO ’s overview Thailand continued to perform well especially in the Consumer segment with a PBT growth of 24.1%, underpinned by a healthy loan growth of 6.1% YoY, sale of NPLs, as well as MFRS9 writebacks. Overall, CIMB Thai’s contribution to Group PBT improved marginally to 7%, up from 6% the year prior. Singapore’s PBT grew a commendable 18.8% YoY, driven by improved NIM and lower provisions, as well as better-than-industry loan growth of 3.7%. PBT contribution to the Group remained flat YoY at 7%. A special mention to our Cambodia team who reported an impressive PBT growth of 60% YoY, marking their 10th year of continuous growth and winning Asiamoney’s best international bank in Cambodia award for two consecutive years. PBT by Segment GVP & Funding 17% RISK AND COMPLIANCE Effective risk management and risk culture are key priorities of the Group. We continue to strengthen our Enterprise-Wide Risk Management (EWRM) framework as well as maintain our three lines of defence model whereby business units are the first line of defence, followed by control functions such as Group Risk, Group Compliance and Group Finance, and finally Group Internal Audit Division as the third line of defence. A challenging operating environment continued in 2019 which required the Group to continuously assess and leverage our risk management frameworks. Multiple initiatives were put in place to further strengthen existing infrastructure and internal controls. For example, we initiated several projects powered by machine learning to enable predictive prioritisation of Anti Money Laundering (AML) alerts, to identify potential mule profiles used in money laundering, as well as a surveillance system to identify suspicious misconduct in treasury dealing activities. PBT by Country Consumer Banking 30% Others Singapore 2% 7% Thailand 7% Malaysia 69% Indonesia 15% Wholesale Banking 29% Commercial Banking 24% At the CIMB Thai Townhall with Omar Siddiq (Group Chief Operating Officer) and Adisorn Sermchaiwong (CEO of CIMB Thai). Celebrating CIMB Singapore’s 10th year anniversary with #teamCIMB. 20
23. C R E AT I N G VA L U E T H R O U G H C O R P O R AT E RESPONSIBILIT Y Our success is directly linked to the prosperity of the communities and economies in which we operate . In giving back, we extended over RM38.4 million to various community-, education-, and sports-related causes through CIMB Foundation and wider Group-driven initiatives. Here are some highlights. In 2019, CIMB Foundation launched CIMB SHINE in Malaysia, a platform for start-ups, entrepreneurs, and SMEs to equip them with the right knowledge in finance, 4IR, and e-commerce. In partnership with MDEC, and Cheng & Co Accounting Firm, the platform delivered seven seminars across Malaysia to benefit more than 1,000 SMEs. Our Be$MART financial literacy programme entered its third year with a mobile app launch, allowing users to plan their finances more effectively. The app is an extension to the 240 workshops conducted in the past three years which benefitted over 16,000 students in Malaysia. On a similar note, 2019 saw CIMB Niaga’s Ayo Menabung dan Berbagi, Tour de Bank, and Leaders Camp programmes helping over 8,000 students from 60 schools and universities throughout Indonesia. On the sporting front, the Group’s flagship Junior Development Programmes in football, cycling, and squash grew from strength to strength. In particular, our squash programme has seen the rise of talents such as Ng Eain Yow and Sivasangari Subramaniam, globally ranked #31 and #42 respectively. E N H A N C I N G S H A R E H O L D E R VA L U E Macro and domestic economic concerns brought about a 6.0% decline in the FBMKLCI Index during the year. Meanwhile, our share price as at end-2019 is RM5.15, a 5.1% decline from the adjusted share price of RM5.43 from the year before. The Group’s foreign shareholding rose to 30.2% at end-2019 compared to 25.9% previously. We declared a total of 26 sen per share of dividend for the year, while the dividend payout for FY19 of RM2.55 billion is equivalent to 50.9% of BAU net profit for the year (BAU net profit excludes transformational costs, impairments and write offs of intangible assets). The second interim net dividend payment of 12 sen per share will be fully paid in cash. The full-year Dividend Reinvestment Scheme (DRS) implies an average electable portion of 50%. Throughout 2019, CIMB’s strong performance won accolades from the finance community, including: 1. Best Digital Bank and Best Retail Bank in Malaysia by The Asian Banker 2. Best Digital Bank in the Philippines by The Asian Banker 3. Best Mobile Initiative, Application and Programme in Indonesia by The Asian Banker 4. Best Cash Management Bank and Best Equity House in Malaysia by Alpha SEA Best Financial Institution Awards 2019 5. Best Sukuk Bank and Best Islamic Trade Finance Provider by Global Finance World’s Best Islamic Financial Institutions Awards 2019 6. Best International Bank – Cambodia by Asiamoney Best Bank Awards 2019 Bun Yin, CEO of CIMB Cambodia, winner of Cambodia’s Best International Bank by Asiamoney two years in a row, serving a customer on Customer Day. Hari Raya shopping with charity homes in Kuantan, a collaboration between CIMB Foundation and Mydin Malaysia, graced by the presence of His Majesty the King of Malaysia, Kebawah Duli Yang Maha Mulia Seri Paduka Baginda Yang di-Pertuan Agong Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah. 7. Best Bank for CSR – Malaysia by Asiamoney Best Bank Awards 2019 8. Best Customer Experience – Branch & Best Customer Experience – Contact Centre by The Digital Banker 9. Best Bond House in Southeast Asia by Alpha SEA 13th Deal & Solution Awards 2019 21
24. group CEO ’s overview M OV I N G F O R WA R D OUTLOOK OUR FOCUS FOR 2020 Although we are only two months into 2020, we have already experienced multiple macro shocks, the most serious being the COVID-19 outbreak that has dominated media headlines. With close to 80,000 cases reported in China since January, quarantine measures have impeded commerce and industry in “the world’s factory”, significantly disrupting global supply chains. Travel restrictions put in place to contain the spread of the virus has also resulted in a sharp decline in tourism, especially as Chinese passport-holders make up about 10% of global tourists. Despite the uncertain outlook for 2020, the Group will stay the course to ensure that our Forward23 aspirations remain on track. This year, we intend to continue accelerating growth in Malaysia and Indonesia, our two largest markets that collectively contribute more than 80% of Group PBT. The impact of COVID-19 on economic activity has been felt around the world, with an estimated 0.2% reduction in global GDP growth. ASEAN central banks have been quick to respond, with rate cuts in Malaysia, Indonesia and Thailand. We expect more countries to follow suit, in addition to supplemental budgets being announced to address slumping markets. As a result, we have adjusted our 2020 GDP growth forecasts accordingly, i.e. 3.6% - 3.7% in Malaysia compared to our initial forecast of 4.2%. Singapore, with a greater share of foreign investment in GDP and higher dependence on trade, is expected to grow only 0.3% this year. Thailand, which greets over 10 million Chinese travellers annually, is forecast to grow by 1.7%. On the other hand, Indonesia is less reliant on tourist dollars and is expected to grow by 4.8% this year. These forecasts are based on the assumption that the virus has its biggest impact in the first half of this year, and that economies will rebound in the second half. Executing our Forward23 programmes across the 5 strategic pivots will remain key in 2020, including ensuring the realisation of the financial benefits from our TCJ roadmap, strengthening the tech resiliency and stability of our platforms, recalibrating our business towards a more digitally-led model, commencing a structured productivity programme, as well as keeping the momentum of our sustainability efforts. Additionally, the Group will continue to grow our balance sheet prudently and keep strong controls on costs and investments. Our targets for FY20 are: FY20 Target ROTCE* 10.8% – 11.3% ROE 9.0% – 9.5% Dividend Payout Ratio 40% – 60% Total Loan Growth 6.0% Loan Loss Charge 0.40% – 0.50% CET1 (Group) Cost-to-income Ratio >12.0% <53.4 *Note: We have introduced a new target, Return on Tangible Common Equity (ROTCE), which is a more accurate measure to determine the efficient use of available capital to generate profit. This excludes intangible assets and goodwill, and is widely used by global banks. The ROTCE in 2019 was 11.3% Celebrating CIMB Bank Philippines’ 500,000th customer milestone in August 2019. By the end of the year, we acquired over 1.7 million customers, making us one of the fastest growing banks in ASEAN. 22
25. With #teamCIMB from the Customer Resolutions Unit in Kuala Lumpur, Malaysia. AC K N OW L E D G M E N T S In 2019, we made several changes to our leadership and management team to become better equipped to deliver Forward23. We welcomed the appointment of Ahmad Shahriman Mohd Shariff as CEO of Group Islamic Banking. Internally, we appointed Adisorn Sermchaiwong as President and CEO of CIMB Thai, Victor Lee Meng Teck as CEO of Group Commercial Banking and CEO of CIMB Bank Singapore, Mohamed Rafe Mohamed Haneef as CEO of Group Transaction Banking and Mak Lye Mun as Adviser to the Group CEO. I would like to thank Mak Lye Mun for having served as CEO of CIMB Bank Singapore, and Kittiphun Anutarasoti for his past contribution as President and CEO of CIMB Thai. My gratitude also goes out to Victor Lee Meng Teck and Mohamed Rafe Mohamed Haneef for their contributions in their previous roles as CEO of Group Transaction Banking and CEO of Group Islamic Banking respectively. I would like to also thank Renzo Christopher Viegas and Thomas Meow for their service as Advisers to the Group CEO. In terms of changes at the Board level, we saw Didi Syafruddin Yahya joining the Board of CIMB Group as an Independent Director and Sukanta Kumar Dutt joining the Board of CIMB Bank Berhad. Allow me to express my sincerest gratitude to Tongurai Limpiti and Dato’ Sri Amrin Awaluddin for having served on the boards of CIMB Group and CIMB Bank Berhad respectively. The year 2019 also saw the dissolution of CIMB’s International Advisory Panel (IAP), established in 2006 to assist the Board and senior management by providing an unbiased external perspective, principally in terms of steering the Group’s geographical expansion. We benefitted tremendously from the wisdom and advice of the IAP, especially with regards to establishing our regional footprint, and most of all from Tun Musa Hitam, who had chaired the panel for the past 15 years. Our deepest gratitude to all the luminaries who had served on the IAP. On behalf of Group management, I would like to extend my thanks to all our Board of Directors for their guidance and unwavering support. Allow me to also thank our clients, shareholders, regulators, and the communities in which we operate, for placing their trust in CIMB and its leadership. Last, but most definitely not least, I am immensely grateful for the support and commitment of #teamCIMB. I am always heartened to see the dedication of my fellow colleagues in banding together no matter the difficulty. Even though 2020 began on a tough note, I look forward to working with each and every one of you to soldier through all challenges and capitalise on opportunities and achieve our Forward23 aspirations together. Tengku Zafrul Tengku Abdul Aziz Group Chief Executive Officer 23
26. economic and banking In ASEAN , fiscal policy and trade openness should prove drivers of differential performance, with Thailand and Singapore pursuing expansionary policy and Malaysia and Indonesia being more cautious. Our forecast for growth in ASEAN overall shows a deceleration for 2020 relative to 2019, but that should mask an acceleration during the second half of the year. The 2020 outcomes will also depend on country’s sensitivity to a pandemic and the economic consequences of such a pandemic. We have created two indices that rank Asian countries by both measures. The first depends on factors like the demographic composition of a country and the magnitude of visitor arrivals, but also critically on the quality of each country’s healthcare system. On this measure, Indonesia and the Philippines are especially sensitive. On the second, economic sensitivity, Hong Kong, Singapore and Thailand are the most exposed because of the importance of tourism and services in their economies. 2020 would also see a reduction in the political risk premium given the distance from the elections in Indonesia and Thailand. Malaysia, however, will need to navigate the changes wrought by unexpected change in government at the end of February 2020. Singapore’s expected election in 2020 (latest by April 2021) would likely result in a persistence of the status quo. or e es Th ia ail an d Vi et Ph na ilip m pin es ia on Ind 80 70 60 50 40 30 20 10 0 Economic Sensitivity Index for Asian Countries ap 80 70 60 50 40 30 20 10 0 Pandemic Sensitivity Index for Asian Countries M ala ys Si ng ia ap Ind ore on e Th sia ail an d Vi et Ph na ilip m pin es We also saw different degrees of importance stressed by central banks over inflation, growth and exchange rates. The Bank of Thailand saw continued strengthening of the baht on the back of its large current account surplus, itself a sign of weak domestic investment and undertook a number of measures designed to promote capital outflow. Bank Indonesia, shifted its concerns away from the current account and the value of the rupiah to GDP growth, repeatedly lowering interest rates despite a fiscal stance that has been tight. In Europe, in contrast, the UK’s controversial withdrawal, the ideological divisions over fiscal policy and the limits to quantitative easing are likely to combine in pushing down growth to 1% even as the global trade decline stabilises. ys The US-China trade tensions were disruptive to ASEAN nations in 2019, especially those more open to trade and where foreign investments are critical for their growth. ASEAN, though, was also divided by the scope for and willingness to use fiscal policies in meeting the external shocks. For instance, Thailand and Singapore have been pursuing expansionary fiscal policies, reinforced by COVID-19. Malaysia, while announcing a 2020 supplmental budget, continues to constraint itself to not worsening its federal budget balance. We have seen Indonesia tightening its policies for structural reasons, mainly to improve its fiscal position. Besides the spectre of disease, the uncertainty stemming from the vague position of the US administration on trade and foreign policies will likely remain a drag on GDP growth. This will tend to dampen investment and through creating tail risks associated with either a re-ignition of trade conflicts, geopolitical miscalculations that lead to real conflicts. ng Across ASEAN monetary stimulus was a means to offset the short-run unfavourable impact from US-China trade tensions. Trade diversion – firms relocating out of China was another offset. Overall, GDP growth decelerated in ASEAN in 2019. The projected growth pickup in 2020 is precarious, presuming successful control of the COVID-19 epidemic by the first half of 2020, with a sharp subsequent rebound and no backtracking on trade policy differences. Our 2020 forecast is weaker than the GDP growth in 2019. ala Trade tensions and receding monetary policy options in key parts of the world were two forces that influenced economic trends and asset markets last year. What did not change from previous years was the continuing relatively sluggish global growth. Mild inflation led some central banks to manage the downside risks to growth by taking greater credit risks (Japan, Eurozone). Others, with more scope to use old-fashioned rate cuts did just that. With further easing now, likely due to COVID-19, the global weighted average policy rate should reach a seven-year low by end of first quarter 2020. 2020: CAUTIOUS OPTIMISM Si Clarence Darrow, a prominent US attorney in the early 20th century, said, “History repeats itself, and that's one of the things that’s wrong with history”; and that was one of the things troubling in 2019. Marking the end of the decade, 2019 saw world economies struggling with persistent, recurring issues: From geopolitical power struggles between the US and China to socio-economic and political strife in Venezuela, Chile, France, Myanmar and India; from US Administration’s uncertainty to the resilience of the emerging world; from financial accountability to social and environmental responsibilities – 2019 was indeed a challenging year. M 2019: HISTORY REPEATS Source: CIMB calculations using data from Haver Analytics 24
27. ECONOMICS OF CLIMATE CHANGE According to the Asia-Pacific Disaster Report 2019 , natural disasters triggered by climate change and environmental degradation continued to grow in intensity, frequency and complexity. The annual economic losses for Asia and the Pacific are projected at $675 billion, approximately 2.4 per cent of the region’s GDP. The World Bank says that the climate impacts could push an additional 100 million people into poverty by 2030. Further, the United Nations points out that delay in tackling the financial risks to the global economy triggered by climate change could cost companies nearly $1.2 trillion over the next 15 years (MSCI: Carbon-Delta). Banks and institutional investors are experiencing vulnerability to climate change and some are being forced to start accounting for the associated risks, including the exposure of mortgage books to natural disasters, the impact of extreme weather conditions on sovereign risk, the exposure to carbon-intensive sectors, etc. MARKET OUTLOOK 2020 Regulatory authorities, policy-makers and institutional investors are increasingly focussing on sustainable finance. Hence, in 2020, we will see more commercial banks committing to principles for responsible banking and positively contributing to sustainable development by managing and influencing the economic, environmental, social and governance impacts in their value chain. The banking sector will also face increased competition from pure-play FinTechs, e-commerce companies, telecom service providers, and established financial services brands. The central banks of Malaysia and Singapore, for instance, has plans to issue digital banking licences in the near future. The years ahead will also see the digitalisation efforts of major banks accelerating; the potential is huge, with nearly 198 million unbanked citizens throughout ASEAN. Against this backdrop, in the four major markets where we operate Malaysia, Indonesia, Singapore and Thailand, we are well-equipped and well-positioned to embrace the changes and compete with both the traditional and Fintechs to respond to the dynamic marketplace and the evolving sector. MALAYSIA: We see potential earnings risk from an OPR (overnight policy rate) cut and expected deterioration in asset quality. We expect the industry’s gross impaired loan ratio to rise further from 1.5% at end-2019 to 1.7% at end-2020. Our economist is also anticipating two rounds of OPR cuts in 2020 – one of which has already taken place in January – which could be detrimental for banks’ margins. Meanwhile, we are projecting a loan growth of 4-4.5% in 2020, above the 3.9% in 2019, with potential downside risks from external headwinds arising from the COVID-19 outbreak. The RM20 billion stimulus package announced on 27 February should have a net positive impact, but we believe business sentiment will remain cautious until external and domestic political headwinds dissipate. Due to emerging climate policies, advanced technologies, and growing pressure from institutional investors and regulators, banks have started to reassess the value of their financial assets. Financial markets that recognise the potential of sustainable finance and investments are already working to tap huge opportunities of the present – from clean energy infrastructure to resilient, green buildings, and the new financial instruments to fund those investments. Banks globally have started rethinking their business models as the transition to a net-zero carbon emission economy becomes more and more imminent. Central banks, policy-makers and regulators in Asia have either mandated or are in the process of issuing guidelines to help financial institutions and companies adhere to a set of climate risk disclosures and classification standards. In summary, many more opportunities will emerge over the next 3-5 years, motivating Banks to meaningfully contribute to shaping a better future while championing sustainable business. INDONESIA: The favourable inflationary environment from 2019, coupled with GDP growth forecast of 5.1% for 2020, should improve overall demand and enable industry loan growth. We expect loan growth for the aggregate ID banks we cover to improve from 8.4% in 2019 to 9.1% in 2020. Furthermore, the expected stable net interest margins environment would allow PPOP growth to accelerate, assuming stable non-interest income and operating expenses growth. The overall improvement in the economy should rein in NPLs and in turn allow banks to lower credit costs to below 100 bps in 2020 from 122 bps in 2019. In totality, we expect banks’ aggregate profits to improve toward low-mid-teens this year from 5.4% last year. SINGAPORE: We expect the effects of lower policy rates across the region on net interest margins to stabilise in 2H20 onwards as funding cost savings gradually catch-up to lower yields. To this end, we look towards fee income streams such as wealth management income to bolster earnings as credit growth is likely to stay moderate on a flattish GDP growth forecast of 0.8% in 2020 (c.f.+0.7% in 2019). The wildcard of the year lies in the extent of cashflow disruptions from COVID-19, adding to potential revenue headwinds if the situation prolongs. The Monetary Authority of Singapore is set to award five digital banking licenses in mid-2020. The path to profitability while servicing the underserved segment may be a challenging task for the newcomers, but we do expect stiff digital competition for the incumbents ahead. THAILAND: We believe a stronger recovery in business sentiment following the government’s attempt to encourage FDI could boost 2020 loan growth further to 3.3%, from 2.7% in 2019. Domestic spending stimulus could also lead to a recovery in domestic demand and propel the retail segment, despite the already-high household debt to GDP. Banks’ net interest margins are likely to continue to be pressured by the two 25 bps rate cuts in late 2019, and two possible 25 bps policy rate cuts in 1H20, bringing the policy rate to 0.75%, below its historical floor of 1.25%. Without any clear sign of improvement in the economy, we expect a GDP growth of 2.4% in 2020. 25
28. material matters MATERIAL MATTERS HOW DO WE REALISE OUR STRATEGY ? MORE INFORMATION Why Are These Important? GEOPOLITICAL AND ECONOMIC DEVELOPMENTS We operate in an increasingly evolving environment. The pace of change is accelerating; hence we need to align our strategies to this. • Consistently monitor external developments and update our strategies accordingly. • Formulate a growth strategy which recognises that every market is different, with varying starting points and market dynamics. Page 24 Economic and Business Review & Outlook TECHNOLOGY The 4th Industrial Revolution is here and this has necessitated the need to pivot the organisation digitally. Technology and data forms the core that will enable the organisation to compete and win in the future. • Build a “beyond banking” proposition for future value capture to the Group by being both a participant and/or owner of Ecosystems. • Strengthen the resiliency of our systems. • Increase productivity via technology modernisation and automation efforts. • Strengthen data analytics and capabilities to be a data-first organisation. • Apply comprehensive data governance, including data origination, access, use, security and privacy. Page 14 Group CEO’s Overview Page 70 Sustainability Report REGULATION Regulation provides protection as well as stability for the financial ecosystem. Rules change and evolve, thus we need to be fully engaged with our regulators. • Enhance policies, procedures and risk practices in line with regulatory standards. • Closely monitor industry and regulatory developments worldwide. Page 27 Key Risks and Mitigation CUSTOMER EXPECTATIONS Customer expectations are rising in line with the digital revolution where access and speed of information sharing is a key catalyst. • Embrace the “Treating Customers Fairly” principles. • Transform customer journeys by leveraging on digital and introducing new ways of working. • Incorporate Net Promoter Score (NPS) as a key target across the organisation. Page 14 Group CEO’s Overview Page 28 The Group’s Strategy WORKFORCE NEEDS The mix of talent we need as well as what tools they need in order to succeed in the 4th Industrial Revolution environment will be critical. • Build and source key digital talent. • Set a target of 30% digital, data and design (3D) talent by 2023. • Invest in upskilling and reskilling to future-proof our people, ensuring their skills remain relevant. • Encourage a culture of responsibility and cooperation through “A Better CIMB” initiative to drive performance. ECONOMIC, ENVIRONMENTAL AND SOCIAL (EES) FACTORS Various stakeholders are increasingly expecting companies to incorporate EES into the core of their strategies. CIMB intends to be a leader in this space and hence is undertaking various efforts. 26 • Mitigate environmental and social impact arising from our financing and operational activities through our sustainability due diligence processes. • Provide banking solutions that facilitate sustainable development, thus enhancing positive EES impact for our clients and ourselves. Page 15 Group CEO’s Overview Page 89 Human Capital Development Page 144 Sustainability Statement
29. key risks TYPE OF RISK MITIGATION ACTIONS CREDIT RISK • The Group has a robust credit risk policy framework, embedded with prudent lending guidelines to minimise credit default and losses. Appropriate governance which are subcommittees of the Group Risk and Compliance Committee (GRCC) is in place to manage the credit risk of the Group. • The Group strives to maintain a portfolio of credit risk which is adequately diversified by country, industry, market, sector, product, customer segment and duration. Business Units are responsible for the risks, with Group Risk Division providing independent oversight for overall risk control. • Aside from periodic reviews, the Group has an Early Warning Indicator and Watchlist Process. It is a pro-active credit risk management tool that identifies deteriorating credits at early stages, thereby minimising any potential credit loss. • An independent post-credit review process conducted regularly assesses the quality of loans approved. • The Board Risk and Compliance Committee (BRCC) and GRCC periodically set the high level credit risk direction using the Risk Posture and Risk Appetite frameworks. • Exposures are actively monitored, reviewed regularly and reported to GRCC and BRCC. Deteriorating portfolios are identified, analysed and discussed with the relevant business units for appropriate remedial actions, as required. • Data and analytics are leveraged to assess portfolios, as well as to timely identify problem areas and decide on corrective actions. MARKET RISK • The Group maintains a robust and effective market risk policy framework and actively measures, monitors and manages market risk within the approved Risk Appetite. • The Group Market Risk Committee, a subcommittee of the GRCC, is supported by several working groups to provide better oversight on various areas of risk and governance. • The Group also provides constructive challenge to the first line of defence in managing the market risk of the Group and adopts the best practices for market risk management in the region. NON-FINANCIAL RISKS • The Group actively manages its non-financial risks, which comprises Operational, Reputation, Shariah, Technology, Fraud, Outsourcing and Business Continuity risks within the Board approved risk appetites. • The Operational Risk Management function, which resides within CIMB Group’s Non-Financial Risk Management (NFRM) Department, provides the methodology, tools and processes for the identification, assessment, reporting and management of operational risks by the respective risk owners across the Group. NFRM also independently oversees the operational risk controls monitoring that resides within the first line-of-defence functions. • The Group Operational & Resiliency Risk Committee (GORRC), a sub-committee to the GRCC is also in place to provide direct oversight on operational risk & technology matters across the Group. FUNDING & LIQUIDITY RISK • The Group maintains high quality liquid assets and well diversified sources of funds as a liquidity risk buffer under both business-as-usual (BAU) and stress conditions. • The Group actively measures, monitors and manages its liquidity positions to comply with regulatory Basel III liquidity risk requirements and internal risk appetite. • The Group also performs semi-annual consolidated stress tests (including liquidity stress tests) to identify vulnerable areas in its portfolio, gauge the financial impact and enable management to take pre-emptive actions. • The Group Asset Liability Management Committee (Group ALCO), a subcommittee of GRCC discusses the liquidity risk and funding profile of the Group. COUNTRY RISK • Country limits are set to capture and manage country risks arising from credit exposure to obligors. • Country limits are approved by Group Credit Committee upon consideration of the relevant risks and business requirements. SHARIAH NONCOMPLIANCE RISK • The Group has established the Board Shariah Committee (BSC) and four Shariah functions namely, Shariah & Governance, Shariah Risk Management, Shariah Review and Shariah Audit, as required under BNM Shariah Governance Framework. This governance is to monitor Shariah compliance in the Islamic banking business. • Shariah-related policies and procedures have been developed among others, requiring approval from BSC for all Islamic banking business and operations. • Risk management tools are in place to facilitate how Business Units (BU)/Business Enablers (BE) identify and manage inherent SNC risk. SUSTAINABILITY RISK • The Group has instituted the Sustainability Risk Management Framework with the objective of identifying, assessing, governing, managing and monitoring its EES risks through appropriate policies, procedures and controls. • The Group Sustainability Council oversees the sustainability risk profile of the Group's business activities and ensures the implementation of appropriate policies, procedures and controls. 27
30. the group ’s Launched in early 2019, Forward23 is the Group’s response to the ever-evolving operating landscape in the new digital economy. The strategy reflects the Group’s strong commitment towards sustainable value creation for our stakeholders and this is reflected by our new purpose statement, ‘Advancing Customers and Society’. As a leading ASEAN universal bank with presence and footprint in all ASEAN countries, we recognise that starting points and market dynamics vary, and as such, have designed differentiated market postures across the various markets that we operate in. Malaysia and Indonesia represent the two largest sources of value for the Group. Forward23 is about the focused pursuit of sustainable growth and performance for the Group at present, and into the future. For the year in review, the following strategic pivots formed the core of our Forward23 execution: • Customer Centricity • Technology & Data • Our People • Ventures & Partnerships • Sustainability CUSTOMER CENTRICIT Y Over the last few years, we have worked on strengthening our Customer Experience (CX) framework and culture in the effort to become a customer-centric organisation. The Group has taken a multi-pronged approach to this, focusing on the end-to-end transformation of customer journeys, putting in place CX metrics across all levels of operations and building a strong CX culture for our people. In 2019, we received several recognitions for CX excellence, including the “Malaysia Excellence Award in Customer Experience  Asia-Pacific Best Practices Awards. In Indonesia, we were awarded “The Best Bank in Customer Satisfaction Services” at the Tempo Financial Award 2019. We anchor ourselves on our CX promises to make banking Easy, Efficient and always going the Extra Mile for our customers. We also provide our employees proper Escalation points of support for better customer resolution, as well as empowering them (Empowerment). – Banking Industry for Overall Experience” at Frost & Sullivan’s 2019 The Group Chief Strategy and Design Officer introducing the Group’s strategy at the Forward23 kick off in February 2019. 28
31. UNDERSTANDING OUR CUSTOMERS In 2019 , we kickstarted the revamp of select customer journeys in To fortify the mindset of continuous improvement from a customer- our largest markets, covering the Commercial Lending and Retail centric standpoint, we have rebuilt our CX measurement ecosystem by determining key metrics that are vital to customers at the operational, CASA journeys in Malaysia, as well as the Auto Financing, SME Lending and SME Funding journeys in Indonesia. transactional and strategic levels. We have since seen improvements across our core channels, and derived valuable insights which has helped us strengthen our value proposition. The ultimate outcome gauge of where we stand in customer engagement is the Net Promoter Score (NPS). This is now measured regionally and in 2019, we made particularly strong improvements in Indonesia. INSTILLING CX VALUES Becoming a customer-centric organisation begins with ensuring our people share the same values and are well-equipped to provide exceptional CX. To that end, a number of internal activation, engagement and training initiatives have been rolled out to create T E C H N O LO GY & DATA  Shaping the future of the industry, technology in banking is rapidly evolving with the emergence of new business models, hybrid industry players and raised customer expectations. To support our pursuit to future-proof the Group and redefine our position in this disruptive environment, the Group is undergoing a multi-year technology and data transformation to drive greater resiliency, speed and differentiated digital solutions. In 2019, we formulated a transformation roadmap to refresh our technology fundamentals, with focus on improving technology CX awareness and help build a workforce that is customer-centric. resiliency, IT security and efficiency. With the transformation in Among the highlights of the year include our regional Customer Day Group to support new ways of working as we strive to move celebration to appreciate our customers and nurture trust in the CIMB brand. We reached out and celebrated our customers through the Group’s various channels. In activating our customer-centricity agenda across the organisation, we introduced an internal guide to help our frontliners interact effectively with customers. We have also put in place structured training programmes to enhance the team’s place, we also seek to build critical business capabilities within the towards building a digital-centric banking platform and expand into ecosystem-linked business models. The Group Data Office was set up to drive enterprise-wide data transformation across the following streams; develop overall data vision and strategy, support business functions on domain deployment and execution of business-aligned data strategy, and refine policies and framework on data governance. understanding and capabilities. END-TO-END REDESIGN OF CUSTOMER JOURNEYS A dedicated Transforming Customer Journey (TCJ) department was set up to drive a holistic redesign of our customer journeys. The department, comprising a diverse talent mix made up of experts in iterative design and agile practitioners, bring a new way of working OUR PEOPLE  Our greatest asset, our people, are central to delivering and supporting our Forward23 plans and aspirations. Thus, we make it a priority to equip our people with essential skills and competencies within the Group, paving the way for new capabilities. to remain competitive in this data-driven, tech-enabled TCJ seeks to integrate innovative digital solutions such as fully proofing agenda, developing a workforce with the right skillset is online application processes, eKYC, and simplified real-time customer pre-screening, among others, allowing us to provide seamless, fast and hassle-free services to our customers. Leveraging on digital in our customer journeys will positively impact end-to-end productivity of our employees, as well as empower them to focus on delivering value. environment. In tandem with our digitalisation efforts and futurecrucial to help achieve our ambitions. The Group has committed to ensure that by 2023, 30% of the Group’s employees are digital, data and design-enabled. Pivoting towards this target, we have put in place a strategy to build and retain a 3D mix in our workforce, as well as strive to position CIMB Group as a 3D employer. 29
32. the group ’s strategy FUTURE OF WORK CENTRE DIGITAL BREAKTHROUGH IN THE PHILIPPINES In April 2019, we introduced the Future of Work Centre (FOWC) to strengthen employability of our employees by upskilling and reskilling, particularly in relation to digital, data and design (3D) skills. The FOWC offers training programmes for employees of all levels of competencies, and as of 2019, more than 2,200 employees have undergone training related to 3D skills. The Group’s all-digital, mobile-first bank in the Philippines was officially launched early-2019 and has proved its ability to scale with the acquisition of 1.7 million customers in the first year. CIMB Bank Philippines operates a unique business model enabled by partnerships, which sees us providing services on digital platforms. We are the first bank in the Philippines to allow customers to complete end-to-end digital account opening. The FOWC also facilitates job mobility of employees who have undergone upskilling/reskilling to reap the full benefits of their training. Employees are presented the opportunity to explore new roles via internal and external internships on project-based or temporary placements, providing them a safe environment to practice their skills and gain confidence in their new roles. TALENT ATTRACTION AND RETENTION To support the broader cultural shift as we move towards becoming a more digital-centric organisation, we also look into elevating the employee experience at CIMB Group to strengthen our employer branding and become a compelling organisation for quality digital talent. To this end, we have introduced fast-track recruitment for 3D talent, as well as established principles of a refreshed performance framework to introduce personalised benefits. V E N T U R E S & PA R T N E R S H I P S  In the next few years, stronger efforts will be made to drive CIMB Group’s future-proofing agenda, ensuring relevance, longevity and sustenance of the banking group in the long run. In 2019, we established our Group Ventures and Partnerships division to drive all strategic partnerships across business lines and explore strategic joint ventures. DOMINATING THE E-WALLET SPACE IN MALAYSIA Touch ‘n Go Digital, our payments joint venture with Ant Financial continues to show positive momentum in 2019. With over 6.8 million registered users, 4.2 million annual active users and 116,000 merchants as at end of 2019, the Touch ‘n Go e-wallet is Malaysia’s largest e-wallet business. S U S TA I N A B I L I T Y CIMB Group is committed to sustainable business practices. We aim to create impact by embedding sustainability elements in our governance and internal processes, expanding our sustainable products and services offering and raising awareness on economic, environmental and social (EES) issues to both our internal and external stakeholders. In 2019, we have taken great strides in pursuing our sustainability agenda, with the aspiration to rank in the Top 3 among comparable ASEAN banking groups and in the 75th percentile globally in the Dow Jones Sustainability Index by 2023. #teamCIMB learning about the various programmes under Forward23 and how they can contribute as project team members. 30 
33. LEADING THE WAY FOR THE ASEAN BANKING COMMUNITY In 2019 , CIMB Group played an active role in championing the sustainability agenda, firstly, by becoming one the of the 30 founding banks that assisted in the development of the Principles of Responsible Banking by UNEP-FI, which formally launched on 23 September 2019. We also launched a USD680 million Sustainable Development Goals Bond (SDG Bond), the first ever issued by a Malaysian and ASEAN issuer in the international capital market. CATALYSING CHANGE As a banking institution, we are able to play an impactful role in influencing our customers and clients in moving towards sustainable practices. As a proactive measure in assessing and mitigating the EES risks associated to our operations and business, we introduced our Group Sustainability Policy (GSP) and Group Sustainable Financing Policy (GSFP). The institution of these policies inculcates awareness of sustainable business practices, while helping to build a strong risk culture within the Group. CIMB Group also established the Positive Impact Products and Services (PIPS) framework to guide the development of sustainable products and services. To that end, in 2019 we have committed RM3 billion for the disbursement of Sustainability Linked Loans (SLL) which incentivises companies to commit to sustainabilityrelated performance targets and getting them on board the sustainability agenda. M OV I N G F O R WA R D 2019 was about getting into the rhythm and pace to kick off the transformation, building a solid foundation for the years ahead of us. To ensure forward traction, the Transformation Council, a focus group of our senior management members, provides oversight and steer on our Forward23 portfolio. We have picked up positive momentum at the start of our Forward23 journey, with positive progress made across our key pivot drivers. In 2020 and beyond, we will continue to remain focused in delivering our targets, with ongoing efforts to strengthen our core markets, Malaysia and Indonesia. The Group will also be intensifying efforts in improving technological resiliency, stability and security to support our drive to future proof the organisation. #teamCIMB in the Klang Valley taking part in the #movingForward23together roadshow. 31
34. group financial review by “2019 was a momentous year as the Group kicked-off its new 5-year Forward23 strategic plan and made significant strides in its first year. The Group’s 2019 net profit of RM4.56 billion, translating to a net earnings per share (EPS) of 47.0 sen is commendable considering the challenging operating environment and macroeconomic headwinds. We succeeded to achieve most of our financial targets and most notably, we met our 2019 ROE target of 9.3% on a Business As Usual (BAU) basis. This is whilst making investments under our Forward23 plan to future-proof ourselves and to place the Group in a better competitive position. Our stronger capital position has allowed us to pay the second interim dividend fully in cash, thereby increasing the returns to shareholders.” THE YEAR IN REVIEW The operating backdrop in 2019 was somewhat mixed with the material pick up in treasury market activities being dampened by the continued global trade tensions, which led to slower economic growth across the region and looser monetary policies by most central banks. Despite the softer economic environment across most of our markets, the Group remained focused in its strategy to grow in the targeted segments and markets, whilst concurrently investing for the future to strengthen the core and its people. This enabled us to meet our main financial target of an ROE of 9.3% on a BAU basis and strengthen our Common Equity Tier 1 (CET1) ratio to 12.9%. For 2019, we recorded a 7.7% increase in BAU net profit to RM5.0 billion, equivalent to an EPS of 51.7 sen. BAU excludes the one-off items of the gain from the sale of interest in our asset management business in 2018 amounting to RM928 million and the net transformational costs of RM270 million and the RM185 million write-off of intangible assets in 2019. This is a better reflection of the Group’s underlying operational performance and the subsequent numbers excludes these three one-off items. The strong net profit growth was underpinned by robust operating income growth of 8.2% driven by market share gains in loans in our key operating markets and higher treasury related income. As we ended the year on a stronger capital position, we maintained a high dividend pay-out of 50.9% (on BAU net profit) or a payout to 55.9% based on reported numbers. Asset quality remained stable with a loan loss charge of 0.44% and the Group’s Cost-to-Income (CIR) ratio stood at 53.4% as we invest for the future. 32
35. KHAIRUL RIFAIE Group Chief Financial Officer 33
36. group financial review by group CFO The performance was in line with the Group ’s Forward23 strategic focus on key growth markets and segments, whilst maintaining intensity on asset quality and risk management. The Group streamlined operations across the region and was in active investment mode to derive greater operational efficiency and to future proof ourselves. These factors drove the financial performance in 2019: – The Group’s 2019 revenues were 8.2% higher at RM17.80 billion compared to RM16.45 billion in 2018. – Net interest income (NII) rose 6.3% YoY to RM12.66 billion from stronger loan growth across all core markets, up by 6.7% YoY, offset by the 4bps YoY contraction in Net Interest Margins (NIM) to 2.46%, largely due to the OPR cut in Malaysia. – Non-interest income (NOII) grew by 12.9% to RM5.14 billion mainly attributed to the stronger trading and FX income during the year, coupled with a higher gain from the sale of the equities business in 2019. – Operating expenses were 9.8% higher YoY at RM9.50 billion in 2019 as the Group stepped up strategic investments under Forward23 across all businesses. As a consequence of the investments undertaken, the Group’s cost-to-income ratio (CIR) was slightly higher at 53.4% (52.6% in 2018). G R OW T H D R I V E R S The Group’s bottom-line performance in 2019 was underscored by a sustained loan growth momentum, improved NOII from higher trading and FX activities and strong balance sheet management which mitigated the pressure on NIM. – Loan growth was prudent and the Group remained guided by the Forward23 strategy focusing on key markets and segments, whilst keeping a close watch on risk-adjusted returns. Overall Group Gross Loans expanded by 6.7% YoY led by Consumer and Wholesale Banking loans. Malaysia Consumer loans performed well as we saw market share gains in the mortgages (+8.9%) and auto loans (+3.3%) segments, while Indonesia had meaningful gains in mortgages (+12.5%) and credit cards (+12.7%). Commercial Banking loans recorded strong growth in the Malaysian SME segment but this was offset by lower growth in Indonesia and Singapore. Wholesale Banking loans was robust at 7.2% considering the softer regional economies. – The interest rate cuts in the region, particularly the OPR cut in Malaysia contributed to the 4bps compression in the Group’s NIMs. Nevertheless, the impact was tempered by strong balance sheet management and portfolio optimisation in Indonesia and Singapore, where NIMs rose by 19bps and 8bps respectively. – The Group’s Loan Loss Provisions rose 14.5% YoY to RM1.64 billion from RM1.43 billion in 2018. Commercial Banking provisions improved significantly owing to improved underlying provisions as well as MFRS9 write backs. This is offset by higher Consumer provisions mainly from MFRS9 related adjustments and Wholesale Banking provisions due to an uptick in Indonesia. The Group’s gross impaired loans ratio stood at 3.1% with the Loan Loss Charge (“LLC”) at 44bps for the year. On the whole, the Group’s asset quality remains under control. – Total gross loans grew 6.7% YoY, underpinned by market share gains in Malaysia, Thailand and Singapore growing at 6.0%, 6.1% and 3.7%, respectively. Meanwhile, Indonesia grew at a respectable rate of 3.0%. Consumer Banking loans expanded 9.0% during the year while Wholesale loans were 7.2% higher. – Group deposits were 5.8% higher YoY driven by Consumer and Wholesale Banking deposits which grew 8.9% and 4.5%, respectively, while Commercial Banking deposits improved slightly, rising 0.9% YoY. The Group’s CASA ratio stood at 34.4% as at end-2019 compared to 32.7% in 2018. Liquidity remained strong with the Loan to Deposit Ratio at 92.0% whilst the Liquidity Coverage Ratio stood comfortably above 100% for all banking entities. – Capital adequacy continued to strengthen as we ended 2019 with a CET1 ratio of 12.9% against 12.5% as at end-2018. – The improved investor sentiment in 2019 led to a strong 12.9% YoY improvement in NOII underpinned by Trading and FX revenues, particularly in the third quarter of the year. Other income was also higher from a combination of gains from Non-Performing Loan (NPL) sales in CIMB Niaga and CIMB Thai and a higher gain from the sale of the Malaysian equities business in 2019. Stronger NOII from Trading & FX and Other Income Total NOII (RM’million) +12.9% YoY 4,550 Other Income Trading & FX 221 1,473 5,137 % +143.0 537 +34.3% 1,978 Others 2,577 FY18 BAU^ 2,259 FY19 ^ Excludes CPAM & CPIAM gain of RM928 million in FY18. 34
37. OV E R V I E W O F B U S I N E S S - U N I T P E R F O R M A N C E This section serves as an overview of the performance of the Group ’s business units. Further details can be obtained from the Business Review section of this report. – The Consumer Banking underlying operations performed well as the business continued to gain market share in targeted segments and markets. Consumer operating income grew by 2.3% YoY on the back of a strong 9.0% loan growth, partially mitigated by NIM contraction arising from the OPR cut in Malaysia as well as MFRS9-related adjustments to NII. Consumer NOII showed healthy momentum with a recovery in wealth management income during the year. The divisional provisions rose by 126.5% YoY owing to MFRS9-related model enhancements. With operating expenses 6.7% higher YoY from business expansion in Thailand and Indonesia, the Consumer PBT came in at RM1.96 billion for 2019, a decline of 26.3% YoY compared to RM2.66 billion in 2018. – Commercial Banking had a strong year with its PBT increasing 87.1% YoY to RM1.61 billion in 2019 from RM0.86 billion in 2018. This was attributed to a combination of higher operating income of 6.8% and sharply reduced loan provisions. While divisional loan growth was flat YoY, Malaysia Commercial loans expanded by 12.3% YoY as the other operating countries undertook portfolio realignments for greater client focus. NOII was sharply higher owing to NPL sales in Indonesia and Thailand during the year. Whilst operating expenses were kept under control, the division also benefited from improved underlying loan provisions. – Wholesale Banking posted an increase of 5.1% YoY in its PBT to RM1.93 billion in tandem with the improved market sentiment and activity. This was evident in the healthy improvement in NOII (+14.1% YoY) on the back of stronger Treasury & Markets income. The 7.2% Corporate loan growth supported the steady 6.6% YoY NII growth as it was partially offset by lower NIM. Divisional costs were within expectations while loan provisions rose by 47.9% due to some weakness in a few corporate accounts in Indonesia during the year. FY19 BAU* FY18 BAU^ YoY Consumer Banking 1,959 2,659 (26.3%) Commercial Banking 1,609 860 87.1% Wholesale Banking 1,928 1,834 1,382 5.1% (9.0%) Treasury & Markets 632 423 49.4% Investment Banking (RM’million) Corporate Banking 1,258 38 29 31.0% Ventures, Partnerships & Funding 1,122 920 22.0% PBT 6,618 6,273 5.5% FY19 BAU* FY18 BAU^ YoY Consumer Banking 7,411 7,242 2.3% Commercial Banking 3,412 3,195 6.8% Wholesale Banking 4,927 4,510 9.2% Treasury & Markets 1,546 1,256 23.1% Investment Banking 461 454 1.5% 2,046 1,507 35.8% 17,796 16,454 8.2% (RM’million) Corporate Banking Ventures, Partnerships & Funding Total Income 2,920 2,800 4.3% Notes: * Excludes transformational cost of RM366 million and impairment and write off of intangible assets of RM277 milionl ^ Excludes CPAM & CPIAM gain of RM928 million – Group Ventures, Partnerships & Funding’s (GVPF) PBT rose 22.0% to RM1.12 billion from higher returns from the Group’s fixed income portfolio as well as a higher gain from the sale of the Malaysian equities business. The Group’s 40% interest in the asset management business saw strong growth with Assets Under Management rising by 12.5% YoY. The TnG Digital JV continues to make progressive strides forward as it is now the No.1 e-wallet in Malaysia with 6.8 million registered users and 116,000 merchants as at end-2019. CIMB Philippines has grown to be the strongest standalone digital bank in the country with over 1.7 million customers acquired over its first year of operations. For 2019, GVPF operating expenses were higher due to the Forward23-related staff transformational expenses undertaken in Indonesia and Malaysia in 2019, as well as increased marketing expenses at TnG Digital. 35
38. group financial review by group CFO OV E R V I E W O F C O U N T RY PERFORMANCE The Group continues to strengthen its ASEAN footprint with the acceleration of CIMB Philippines in 2019 . Under the Forward23 plan, there will be a focus on scale and accelerate growth in the Group's main operating countries, Malaysia and Indonesia. For Thailand and Singapore, we are focused on repositioning our business and growing in these markets. Whilst for our newer footprints like Vietnam and the Philippines, we will continue to incubate and invest. The following section provides an overview of the Group’s performance by country: – Malaysia’s PBT expanded 8.0% YoY to RM4.75 billion from a combination of loan growth, a recovery in markets-related trading income and the gain from the sale of the equities business. Malaysia gross loans grew at 6.0% YoY, above the industry growth of 3.9%, largely due to market share gains in Consumer and positive results from the recalibration of the Commercial Banking business. From a PBT perspective, Commercial and Wholesale Banking exhibited the strongest performances driven by revenue growth and lower provisions, while Consumer PBT was adversely affected by topline weakness and MFRS9-related adjustments. – Indonesia PBT eased 20.2% YoY to RM1.07 billion, mainly attributed to higher loan loss provisions arising from a few Corporate customers in 2019. CIMB Niaga’s underlying performance was strong as gross loans grew 3.0% despite the recalibration of its mid-sized Commercial Banking business lines, as Consumer loans chalked solid market share gains. NIMs improved by 19bps to 5.31% over the 12-month period (5.12% in 2018) as lending rates normalised following the interest rate cuts in 2018. Operating expenses were strictly controlled as CIMB Niaga’s CIR improved to 49.1% from 50.2% previously. – Thailand reaped the benefits of its Fast Forward strategic plan with a solid 24.1% YoY improvement in its PBT. Stronger CIMB Thai revenues emanated from NII growth, driven by a 6.1% YoY loan growth coming mainly from Consumer (+12.3% YoY) and Corporate Banking (+3.9%), while NOII strengthened from wealth management and gains from its NPL sale. Loan loss provisions were significantly lower YoY in line with the recalibrated loan portfolio. 36 Loans by country as at 31 December 2019 Singapore 8% Thailand 10% Others 5% Deposits by country as at 31 December 2019 Malaysia 60% 31 Dec 19# RM369.5 billion Singapore 10% Others 2% Thailand 7% Indonesia 14% Malaysia 67% 31 Dec 19 RM401.7 billion Indonesia 17% Loans Growth+ YoY Deposits Growth YoY Malaysia 6.0% Malaysia 6.2% Indonesia ^ 3.0% Indonesia ^ 2.5% Thailand ^ 6.1% Thailand ^ 7.5% Singapore ^ 3.7% Singapore ^ (1.9%) Others** 3.3% Group 5.8% Others** Group 21.9% 6.7% Notes: ^ In local currency # Based on geographical location of counterparty, excluding bad bank ** Including Labuan, London, Cambodia, Vietnam, Hong Kong & Shanghai – PBT from Singapore grew 18.8% YoY to RM505 million led by loan growth of 3.7%, improved NIM from 1.22% in 2018 to 1.30% in 2019 and lower provisions in all the business segments. FINANCIAL POSITION – The Group maintained a strong capital accumulation trajectory, ending 2019 with a CET1 ratio of 12.9%, a 40bps YoY increase from 12.5% a year before. This was achieved despite a higher 50.9% dividend payout with a lower electable DRS. – Capital adequacy and efficiency remains a pertinent focal point both for regulatory and operational requirements. In line with the Forward23 target of a 13% CET1 in 2023, the Group will strategically manage its capital via: (i) continued prudent liability management, (ii) evaluation of options within the dividend reinvestment scheme, (iii) RAROC driven capital deployment, (iv) RWA-optimisation exercises and (v) situational and opportunistic divestments. – The Liquidity Coverage Ratio and Net Stable Funding Ratios remains comfortably above target levels and regulatory requirement, with high quality liquid assets recording improvement in yields.
39. – Forward23 strategic plans will drive the Group’s capital deployment and ensure optimal utilisation within the target markets and business segments. We have put in place various initiatives across our jurisdictions which are anticipated to generate stronger returns on capital in the foreseeable future. C)COMPLIANCE The Group continues to view Compliance as a key priority. We have strengthened the management bench and undertaken extensive education measures to heighten awareness across all lines of defence. Our far-reaching governance framework has resulted in holistic policies and procedures, backed by experienced and capable committees. The compliance culture will be continuously reiterated regionally via staff training and awareness campaigns. D) PEOPLE AND CULTURE A conducive work environment goes a long way in improving staff productivity. The Group Human Resource division drives continuous employee engagement initiatives to encourage participation via projects, workshops and events. With the Forward23 target of achieving 30% of employees to be 3D-enabled, various arrangements, programmes and exercises have been launched. This is to strengthen the staff digital knowledge and capabilities to ensure improved competency and productivity. RETURNS TO SHAREHOLDERS The Board approved and declared total dividends amounting to RM2.55 billion or 26.00 sen per share to be distributed to shareholders for FY19. The first interim dividend of 14.00 sen per share was paid in November 2019, with a DRS take up rate of 66.5% while the remainder was paid out by cash. The proposed second interim single-tier dividend of 12.00 sen per share is to be paid wholly in cash in April 2019 without a DRS option. With this, the full year DRS implies an average electable portion of 54% for 2019. The dividends translated to a payout ratio of 50.9%, on the BAU net profit. NON-FINANCIAL ME ASURES OF PERFORMANCE Non-financial measures remain relevant components in evaluating the success of our initiatives towards achieving our strategic goals. Some of these key measures include: A)SUSTAINABILITY Sustainability is now a core area for the Group to ensure that economic, environmental and social (EES) considerations are integrated into the Group’s risk assessment and management strategies. During the year, the Group became a founding member of the United Nations’ Environment Program Finance Initiative Principles for Responsible Banking (UNEP-FI). We also launched the Group Sustainability Policy and Group Sustainable Financing Policy in 2019 and will continue to expand its scope going forward. As part of CIMB's Forward23 plans, we aim to maintain focus on creating net positive impact to all stakeholders. B) CUSTOMER CENTRICITY With Customer Experience (CX) now entrenched as a core CIMB culture, the wider more-expansive Customer Centricity pillar was added as a Forward23 focus. This pillar focuses on enhancing the customer journey to remove any existing or potential roadblocks, simplifying processes from on-boarding to completion, and providing a differentiated customer proposition. The elevation of customer satisfaction is expected to translate to improved Net Promoter Scores (NPS), as it already has in Indonesia, and plays a pertinent role in risk mitigation, minimise negative perception and ultimately, meeting regulatory requirements. G O I N G F O R WA R D We completed the first year of our 5-year Forward23 strategic plan in good stead, with numerous projects in various states of progress and showing significant promise to spearhead the Group towards achieving its financial targets in 2023. Investments will continue this year to future-proof the organisation and establish growth drivers to ensure that the Group is stronger and better positioned to face competition and adapt to the changing operating landscape. Nevertheless, we recognise the risk posed by the continued domestic, regional and global economic and macro challenges. The declining interest rate environment and threat posed by the Covid-19 outbreak postures management to exercise heightened caution in approaching growth and business opportunities. Risk management and asset quality monitoring will be of utmost priority and we will focus on growing loans prudently to improve our market position and profitability. Similarly, cost management remains a top priority to drive efficiency and maximise returns amidst a cautious environment. Going into the new decade, our financial targets for 2020 are an ROE of between 9.0-9.5%, Return of Tangible Common Equity (ROTCE) of 10.8-11.3%, CET1 ratio of more than 12.0%, CIR of below 53.4% and LLC of between 0.40-0.50%. The Group’s loan growth is projected at 6% for 2020, with the continued objective of selective market share gains in Malaysia and Indonesia, supplemented by opportunistic growth in Thailand and Singapore. 37
40. five-year group 2016 2017 2018 2015 2019 2016 2018 401 ,681,309 379,671,991 356,994,529 2017 2019 2016 2017 2018 2015 2019 2016 2017 2018 26.0 25.0 25.0 14.0 8.5 11.4 9.6 GROSS DIVIDEND PER SHARE (Sen) 8.3 7.3 ROE (%) 2015 338,530,629 320,509,026 369,491,503 346,290,529 324,218,054 DEPOSITS FROM CUSTOMERS^ (RM’000) 20.0 2015 323,719,559 297,822,144 GROSS LOANS (RM’000) 2019 TOTAL CAPITAL RATIO (CIMB BANK) (%) 2015 38 2016 2017 2018 18.7 18.4 16.8 16.2 15.8 ^ 2019 Include investment accounts of customers and structured investments classified as financial liabilities designated at fair value through profit or loss and other liabilities
41. five-year group Financial Year Ended 31 December Key Highlights Consolidated Statement of Income Operating income Overheads Profit before expected credit losses Expected credit losses on loans , advances and financing Profit before taxation and zakat Net profit for the financial year Consolidated Statement of Financial Position Gross loans, advances and financing Total assets Deposits from customers^ Total liabilities Shareholders’ funds Commitments and contingencies Financial Ratios (%) Common equity tier 1 ratio (CIMB Group) Tier 1 ratio (CIMB Group) Total capital ratio (CIMB Group) Common equity tier 1 ratio (CIMB Bank) Tier 1 ratio (CIMB Bank) Total capital ratio (CIMB Bank) Return on average equity Return on average total assets Net interest margin Cost to income ratio Gross impaired loans to gross loans Allowance coverage ratio Loan loss charge Loan deposit ratio Net tangible assets per share (RM) Book value per share (RM) CASA ratio Other Information Earnings per share (sen) – basic Gross dividend per share (sen) Dividend payout ratio (%) Number of shares in issue* (’000) Weighted average number of shares in issue (’000) Non Financial Highlights Share price at year-end (RM) Number of employees~ ^ ~ * 2019 RM’000 2018 RM’000 2017 RM’000 2016 RM’000 2015 RM’000 17,795,879 9,872,905 7,922,974 17,381,9 68 8,655,821 8,726,147 17,626,49 6 9,133,575 8,492,921 16,065,255 8,651,690 7,413,565 15,395,790 9,248,978 6,146,812 1,638,785 5,974,840 4,559,656 1,432,661 7,200,667 5,583,510 2,230,907 6,109,985 4,475,175 2,408,883 4,884,144 3,564,19 0 2,168,624 3,913,993 2,849,509 369,491,503 573,245,655 401,681,309 515,776,579 56,237,171 1,146,023,486 346,290,529 534,089,043 379,671,991 481,501,072 51,374,29 5 1,129,138,654 324,218,054 506,499,532 356,994,529 456,693,097 48,245,479 875,879,316 323,719,559 485,766,887 338,530,629 438,687,729 45,308,175 888,167,213 297,822,144 461,577,143 320,509,026 419,344,515 41,050,778 883,583,439 12.9 14.0 16.8 13.0 14.4 18.7 8.5 0.82 2.46 55.5 3.1 80.7 0.44 92.0 4.70 5.67 34.4 n/a n/a n/a 12.2 13.7 18.4 11.4 1.07 2.50 49.8 2.9 91.0 0.41 91.2 4.39 5.37 32.7 n/a n/a n/a 11.9 13.3 16.8 9.6 0.90 2.63 51.8 3.4 70.5 0.69 90.8 4.14 5.23 35.0 n/a n/a n/a 11.5 13.1 16.2 8.3 0.75 2.63 53.9 3.3 79.8 0.74 95.6 3.92 5.11 35.7 n/a n/a n/a 11.5 12.7 15.8 7.3 0.65 2.66 60.1 3.0 84.7 0.73 92.9 3.63 4.81 34.1 47.0 26.0 56 9,922,966 9,705,987 59.7 25.0 42 9,564,455 9,356,695 49.6 25.0 51 9,225,547 9,016,943 41.0 20.0 49 8,868,384 8,689,362 33.6 14.0 42 8,527,272 8,475,522 5.15 35,265 5.71 36,104 6.54 37,597 4.51 38,952 4.54 40,545 Include investment accounts of customers and structured investments classified as financial liabilities designated at fair value through profit or loss and other liabiliities Excludes headcount borne by third parties Excludes 4,908 ordinary shares held as treasury shares 39
42. simplified group ASSETS 2 .0% 6.6% 9.0% 1.5% 6.7% 9.6% 19.5% 19.0% 2018 2019 62.9% 63.2% Cash and short term funds, reverse repurchase agreements and deposits and placements with banks and other financial institutions Portfolio of financial investments Statutory deposits with central banks Other assets (including intangible assets) Loans, advances and financing LIABILITIES 4.5% 0.1% 0.2% 5.3% 4.5% 6.8% 7.4% 9.4% 4.1% 68.4% 2019 Investment accounts of customers 40 9.9% 3.8% 69.3% 2018 0.3% 0.6% Deposits from customers 0.1% 0.2% 5.1% Deposits and placements of banks and other financial institutions Bills and acceptances payable and other liabilities Debt securities issued and other borrowed funds Ordinary share capital Reserves Perpetual preference shares Non-controlling interests
43. quarterly 2019 RM ’000 Q1 Q2 Q3 Q4 Operating revenue 4,166,146 4,468,851 4,638,445 4,522,437 Net interest income 2,461,543 2,376,781 2,567,740 2,677,854 Net non-interest income and income from Islamic banking operation 1,704,603 2,092,070 2,070,705 1,844,583 (2,302,416) (2,293,626) (2,786,392) (2,490,471) Profit before taxation and zakat 1,603,126 1,955,829 1,336,883 1,079,002 Net profit attributable to owners of the Parent 1,192,042 1,508,625 1,010,348 848,641 Earnings per share (sen) 12.46 15.60 10.36 8.56 Dividend per share (sen) – 14.00 – 12.00 Overheads 2018 RM’000 Q1 Q2 Q3 Q4 Operating revenue 4,303,311 4,863,578 4,140,536 4,074,543 Net interest income 2,419,783 2,367,316 2,413,467 2,433,874 Net non-interest income and income from Islamic banking operation 1,883,528 2,496,262 1,727,069 1,640,669 Overheads (2,141,121) (2,087,316) (2,158,346) (2,269,038) Profit before taxation and zakat 1,742,893 2,459,160 1,486,401 1,512,213 Net profit attributable to owners of the Parent 1,305,874 1,980,783 1,179,718 1,117,135 Earnings per share (sen) 14.15 21.29 12.56 11.67 Dividend per share (sen) – 13.00 – 12.00 41
44. key interest bearing Financial Year Ended 31 December 2019 As at 31 December RM ’million Effective interest rate % Interest income/ expense RM’million Cash and short-term funds & deposits and placements with banks and other financial institutions 42,564 2.39 1,111 Financial investments at fair value through profit or loss 38,137 2.78 1,068 Debt instruments at fair value through other comprehensive income 33,318 3.63 1,227 Debt instruments at amortised cost 39,833 4.40 1,765 360,340 5.88 20,476 429,482 2.57 11,007 Bonds, Sukuk, debentures and other borrowings 28,691 3.57 925 Subordinated oligations 13,521 5.33 710 Interest earning assets: Loans, advances and financing Interest bearing liabilities: Total deposits* Financial Year Ended 31 December 2018 As at 31 December RM’million Effective interest rate % Interest income/ expense RM’million Cash and short-term funds & deposits and placements with banks and other financial institutions 39,903 2.52 1,214 Financial investments at fair value through profit or loss 29,511 2.90 789 Debt instruments at fair value through other comprehensive income 32,276 4.28 1,327 Debt instruments at amortised cost 39,269 3.92 1,542 Loans, advances and financing 337,148 5.89 19,069 405,131 2.51 10,100 Bonds, Sukuk, debentures and other borrowings 23,022 4.04 908 Subordinated oligations 13,482 5.61 744 Interest earning assets: Interest bearing liabilities: Total deposits* * 42 Total deposits include deposits from customers, investment accounts of customers, deposits and placements of banks and other financial institutions, financial liabilities designated at fair value through profit or loss and structured deposits.
45. value added 2019 RM ’000 2018 RM’000 10,083,918 9,634,440 VALUE ADDED Net interest income Income from Islamic banking operations 3,040,663 Net non-interest income 4,671,298 Overheads excluding personnel costs, depreciation and amortisation (3,263,700) Expected credit losses on loans, advances and financing (1,638,785) Expected credit losses written back for commitments and contingencies 12,019 Other expected credit losses made (352,018) Share of results of joint ventures 31,401 Share of results of associates Value added available for distribution 2,610,161 5,137,367 (3,065,699) (1,432,661) 7,427 (134,500) 30,678 (751) 3,576 12,584,045 12,790,789 5,764,674 4,926,747 1,519,653 1,537,314 797,515 376,094 DISTRIBUTION OF VALUE ADDED To employees: Personnel costs To the Government: Taxation and zakat To providers of capital: Cash dividends paid to shareholders Non-controlling interests (104,469) 79,843 1,712,059 1,948,524 To reinvest to the Group: Dividend reinvestment plan Depreciation and amortisation 844,531 Retained earnings Value added available for distribution 36.6% To Employees: Personnel costs 2019 2018 12.1% 3.6% To the Government: Taxation and zakat 12,584,045 12,790,789 38.5% 5.5% 3,258,892 45.9% 45.8% To providers of capital: Cash dividends paid to shareholders Non-controlling interests 663,375 2,050,082 12.0% To reinvest to the Group: Dividend reinvestment plan Depreciation and amortisation Retained earnings 43
46. capital OVERVIEW Capital management at CIMB Group (“Group”) remains focused on maintaining a healthy capital position through building an efficient capital structure. The capital position and structure of the Group are designed to meet the requirements of the Group’s key constituencies i.e. shareholders, customers, regulators, external rating agencies, and others. Guided by CIMB Group’s Capital Management Framework, the objectives of capital management are as follows: (1) (2) To maintain a strong and efficient capital base for the Group and its entities to (a) meet regulatory capital requirements at all times; (b) realise returns for shareholders through sustainable return on equity and stable dividend payout; and (c) withstand stressed economic and market conditions. To allocate capital efficiently across the business units and subsidiaries to (a) support the organic growth generation (b) take advantage of strategic acquisitions and new businesses when opportunities arise; and (c) optimise the return on capital for the Group. (3) To maintain capital at optimal levels to meet the requirements of other stakeholders of the Group, including rating agencies and customers through (a) liability management (b) dividend reinvestment scheme (c) deployment of capital based on risk-adjusted return on capital (RAROC) performance measurement (d) risk-weighted assets (RWA) optimisation exercise and exploring strategic divestments, if any. The Group’s regulated banking entities have always maintained a set of internal capital targets which provide a strong buffer above the minimum regulatory requirements. The following table shows the relevant capital ratios of each of the regulated banking entities of the Group in comparison to the minimum level required by the respective central banks under the Basel III framework. Common Equity Tier 1 Capital Tier 1 Capital As at Minimum As at Minimum 31 December Regulatory 31 December Regulatory Capital Ratios 2019 Ratio 2019 Ratio CIMB Group 12.88% 7.00% 13.99% 8.50% CIMB Bank 13.03% 7.00% 14.43% 8.50% CIMB Islamic 13.35% 7.00% 13.78% 8.50% CIMB Investment Bank Group 61.55% 7.00% 61.55% 8.50% CIMB Niaga Group* 20.20% 10.00% 20.20% 11.50% CIMB Thai Group 13.05% 7.00% 13.05% 8.50% * Inclusive of risk profile no 2 and capital surcharge buffer. K E Y I N I T I AT I V E S Our goal is to continuously build capital towards the full implementation of Basel III requirements, whilst optimising its use fully. Tools that are employed to achieve this include but not limited to the following: (1) liability management via redemption of non Basel III compliant instruments; and issuance of new Basel III instruments; (2) dividend reinvestment scheme (DRS); (3) RWA optimisation; and (4) Group-wide stress testing and impact assessment. Key capital management initiatives that were undertaken during the 2019 calendar year include: (1) The DRS was continued with a reinvestment rate of 66.5%, reflecting investor confidence in the Group and generating an additional RM0.9 billion of capital. (2) CIMB Group issued RM1.0 billion Basel III AT1 Capital Securities on 28 June 2019, and RM0.8 billion Basel III T2 Subordinated Debt on 25 November 2019. (3) The continuing RWA optimisation initiatives during the year, largely through active loan portfolio rebalancing, system and data enhancements and model recalibrations. D I V I D E N D P O L I CY For the financial year ended 31 December 2019, the first interim single tier dividend of 14.00 sen per ordinary share, on 9,727,419,028 ordinary shares amounted to RM1,361,838,664 was approved by the Board of Directors on 31 July 2019. The dividend consisted of an 44 Total Capital As at Minimum 31 December Regulatory 2019 Ratio 16.75% 10.50% 18.72% 10.50% 16.98% 10.50% 61.55% 10.50% 21.50% 13.50% 17.9 5% 11.00% electable portion of 14.00 sen per ordinary share which shareholders could elect to reinvest in new ordinary shares in accordance with the DRS. Following the completion of the DRS, a total cash dividend of RM456,454,563 was paid on 4 November 2019. A second interim single tier dividend of 12.00 sen per ordinary share, on 9,922,966,350 ordinary shares amounting to RM1,190,755,962 in respect of the financial year ended 2019 was approved by the Board of Directors on 30 January 2020. The second interim single tier dividend will be payable by April 2020 and is not applicable under the dividend reinvestment scheme. DIVIDEND REINVESTMENT SCHEME The DRS was implemented in 2013 to provide shareholders with an option to reinvest dividends into new ordinary shares of CIMB and at the same time to help preserve the Group’s capital. It was first applied to the Group’s second interim dividend for the financial year ended 31 December 2012. The dividend reinvestment rate has been encouraging, with an average rate of approximately 79.0% since inception. 49.5% 40.4% 51.0% 50.8% 50.9%** 25.00 25.00 26.00 2018 2019 41.9% 20.00 15.00 14.00 2014 2015 Total 2016 2017 Payout Ratio * Payout ratio based on PAT excluding CPAM and CPIAM gain of RM928 million. ** Payout ratio based on BAU PAT excluding transformational cost.
47. credit   CIMB BANK BERHAD Rating Agency Moody’s Investors Service (Moody’s) Rating Date Rating Classification September 2019 1. 2. 3. 4. 5. 6. 7. Standard & Poor’s Ratings Services (S&P) December 2019 RAM Rating Services Berhad (RAM) August 2019 Malaysian Rating Corporation Berhad (MARC) November 2019 1. 2. 3. 4. Long-term Foreign Currency Bank Deposits Rating Short-term Foreign Currency Bank Deposits Rating Long-term Domestic Currency Bank Deposits Rating Short-term Domestic Currency Bank Deposits Rating Senior Unsecured Notes USD1.0 billion Multi-Currency Euro Medium Term Notes Programme USD5.0 billion Euro Medium Term Note Programme (Senior Unsecured/Subordinated) Long-term Foreign Currency Rating Short-term Foreign Currency Rating Long-term Local Currency Rating Short-term Local Currency Rating 1. Long-term Financial Institution Rating 2. Short-term Financial Institution Rating 3. RM10.0 billion Tier 2 Basel III Compliant Subordinated Debt Programme a. Issuances prior to 1 January 2016 with non-viability events linked to CIMB Bank Berhad b. Issuances on or after 1 January 2016 with nonviability events linked to CIMB Bank Berhad as well as CIMB Group Holdings Berhad and its subsidiaries 4. RM10.0 billion Additional Tier-1 Capital Securities Programme 5. RM20.0 billion Medium Term Notes Programme 1. Long-term Financial Institution Rating 2. Short-term Financial Institution Rating 3. RM5.0 billion Subordinated Debt and Junior Sukuk Programmes 4. RM10.0 billion Tier 2 Subordinated Debt Programme Rating Accorded A3 P-2 A3 P-2 A3 (P)A3 Outlook Stable (P)A3/(P)Ba1 AA-2 AA-2 Stable AAA P1 AA1 AA 2 Stable A1 AAA AAA MARC-1 AA+/AA+IS Stable AA+   CIMB GROUP HOLDINGS BERHAD Rating Agency Rating Date Rating Classification Moody’s Investors Service (Moody’s) September 2019 1. Long-term Issuer Rating 2. Short-term Issuer Rating Malaysian Rating Corporation Berhad (MARC) November 2019 1. Long-term Corporate Credit Rating 2. Short-term Corporate Credit Rating 3. RM10.0 billion Tier 2 Basel III Compliant Subordinated Debt Programme RAM Rating Services Berhad (RAM) August 2019 1. Corporate Credit Rating 2. Corporate Credit Rating 3. RM6.0 billion Conventional and Islamic Medium-term Notes Programme 4. RM3.0 billion Subordinated Notes Programme 5. RM6.0 billion Conventional Commercial Paper Programme 6. RM10.0 billion Additional Tier-1 Capital Securities Programme Rating Accorded Baa1 P-2 AA+ MARC-1 AA Outlook Stable Stable AA1 P1 AA1 AA3 P1 Stable A1 45
48. credit ratings   CIMB INVESTMENT BANK Rating Agency Rating Accorded Outlook 1. Long-term Financial Institution Rating 2. Short-term Financial Institution Rating AAA P1 Stable 1. Long-term Issuer Rating 2. Short-term Issuer Rating A3 P-2 Rating Date Rating Classification RAM Rating Services Berhad (RAM) August 2019 Moody’s Investors Service (Moody’s) January 2019 Stable   CIMB ISL AMIC BANK Rating Agency Rating Date Rating Classification Moody’s Investors Service (Moody’s) September 2019 1. 2. 3. 4. RAM Rating Services Berhad (RAM) August 2019 1. Long-term Financial Institution Rating 2. Short-term Financial Institution Rating 3. RM10.0 billion Sukuk Wakalah Programme Malaysian Rating Corporation Berhad (MARC) November 2019 1. 2. 3. 4. Long-term Foreign Currency Bank Deposits Rating Short-term Foreign Currency Bank Deposits Rating Long-term Domestic Currency Bank Deposits Rating Short-term Domestic Currency Bank Deposits Rating Long-term Financial Institution Rating Short-term Financial Institution Rating RM5.0 billion Tier 2 Junior Sukuk Programme RM10.0 billion senior Sukuk Wakalah Programme Rating Accorded Outlook A3 P-2 A3 P-2 Stable AAA P1 AAA Stable AAA MARC-1 AA+IS AAAIS Stable   CIMB THAI Rating Agency Rating Date Rating Classification Moody’s Investors Service (Moody’s) May 2019 1. 2. 3. 4. 5. RAM Rating Services Berhad (RAM) September 2019 1. Long-term Financial Institution Rating 2. Short-term Financial Institution Rating 3. RM2.0 billion Tier 2 Subordinated Debt Programme Fitch Ratings September 2019 1. 2. 3. 4. 46 Long-term Issuer Rating Long-term Foreign Currency Bank Deposits Rating Short-term Foreign Currency Bank Deposits Rating Long-term Domestic Currency Bank Deposits Rating Short-term Domestic Currency Bank Deposits Rating Long-term National Rating Short-term National Rating Long-term Rating on Subordinated Lower Tier 2 Short-term Rating for Short-term Debt Rating Accorded Outlook Baa2 Baa2 P-2 Baa2 P-2 Stable AA 2 P1 AA3 Stable AA-(tha) F1+(tha) AA-(tha) F1+(tha) Stable
49.   C I M B N I AG A Rating Agency Fitch Ratings Moody’s Investors Service (Moody’s) Rating Date Rating Classification April 2019 1. 2. 3. 4. 5. Long-term Issuer Default Rating Short-term Issuer Default Rating Long-term National Rating Short-term National Rating IDR1.6 trillion Subordinated Debt 1. 2. 3. 4. 5. Long-term Issuer Rating Long-term Foreign Currency Bank Deposits Rating Short-term Foreign Currency Bank Deposits Rating Long-term Domestic Currency Bank Deposits Rating Short-term Domestic Currency Bank Deposits Rating November 2019 Rating Accorded Outlook BBBF3 AA+(idn) F1+(idn) AA-(idn) Stable Baa2 Baa2 P-2 Baa2 P-2 Stable 47
50. balance sheet The core functions of the Balance Sheet Management team include generating balance sheet strategies and providing guidance to business units on sustainable value creation for the Group by optimising structural funding and liquidity profile of the Group ’s Banking book. The team also maintains a robust and responsive Funds Transfer Pricing (FTP) framework, which is governed by the Group Asset Liability Committee (GALCO). The FTP mechanism is reviewed and calibrated based on best market practices and various regulatory principles while accommodating for balance sheet strategies as approved by the management and the Board of Directors. The FTP framework promotes an efficient Group-wide allocation of funding costs and benefits to the business units by taking into account the interest rate and liquidity positions of the Bank. In ensuring sustainable balance sheet funding, a liquidity premium is charged to the user of funds based on the tenure of the transactions; and liquidity credit incentivises to the provider of funds that generate long-term, stable funding. Presently, we focus on attracting stable retail deposits to provide sustainable funding required to extend long-term retail and SME credit that are beneficial to the economic livelihood of the society. Other Assets Loans, Advances and Financing Other Assets Cash & Loans, Advances Short-Term Funds and Financing Financial Cash & Instruments Short-Term Funds Financial Instruments The Group maintains a robust liquidity profile to comply with internal measures that adhere to the best market practices as guided by the Basel Standards. The Group also observes Basel III Liquidity Framework, namely the Liquidity Coverage Ratio (LCR), with a primary focus on ensuring a sufficient buffer of liquid assets to survive a significant stress scenario lasting 30 calendar days. Balance Sheet Management team is responsible in implementing the Base Rate (BR) Framework in Malaysia. BR is computed in accordance with the methodology approved under Reference Rate Framework of Bank Negara Malaysia (BNM). The team monitors the effective base rate and notifies the trigger event to GALCO on the change of BR, facilitating management decision-making. The deployment of BR enables the Group to support efficient financial intermediation and monetary policy transmission while at the same time remaining competitive through transparent asset pricing. The loans, advances and financing of the Group’s assets is funded from a funding mix comprising of customer deposits and investment accounts alongside stable long-term borrowings such as senior funding, subordinated obligations, as well as securitised assets. Our core source of funding, deposits and investment accounts from customers have shown steady and resilient growth of 5.8% in 2019, with a slight decrease in composition in the overall funding source but still reflects a healthy buffer in funding the loan book. Loans, advances and financing grew by 6.7% in 2019 leading to a sustainable increase of net interest income for the Group. LCR 6.6% 2019 9.7% 8.1% 9.7% 6.6% 8.1% 62.9% 69.0% 62.9% 69.0% 6.6% Other Liabilities 23.9% 6.6% 3.2% 10.0% Assets Liabilities Assets Liabilities 23.9% Treasury Liabilities Long-Term Treasury Debts Liabilities Deposits & Long-Term Investment Debts Accounts from Customers Deposits & Investment Other Liabilities Accounts from Total Equity Customers Total Equity 3.2% 10.0% 2018 Other Assets Loans, Advances and Financing Other Assets Cash & Loans, Advances Short-Term Funds and Financing Financial Cash & Instruments Short-Term Funds Financial Instruments 6.6% 9.6% 8.0% 6.6% 9.6% 8.0% 63.1% 69.6% 63.1% 6.7% 23.6% 6.7% 69.6% Other Liabilities 3.0% 9.8% Assets Liabilities Assets Liabilities 23.6% Treasury Liabilities Long-Term Treasury Debts Liabilities Deposits & Long-Term Investment Debts Accounts from Customers Deposits & Investment Other Liabilities Accounts from Total Equity Customers Total Equity 3.0% 9.8% The Group maintained a healthy level of liquid assets which is reflected by a Liquidity Coverage Ratio of 185% as at 31 December 2019, which is well above the minimum requirement of 100% for 2019. The bank also observes its level of liquidity using indicators such as loans-to-funding (LTF) which includes debt issuances in addition to deposits while loan-to-fund-and-equity (LTFE) expands on with the inclusion of equity. The measure for LTF and LTFE for the Group as at 31 December 2019 is 81% and 72% respectively. Given the introduction of new liquidity measures such as LCR in the recent years and upcoming implementation of Net Stable Funding Ratio (NSFR), the Group has been focusing on the growth of high quality liquid assets as well as sticky deposits in ensuring a sustainable liquidity buffer not only to survive a significant stress scenario lasting 30 calendar days but also for longer time horizons. 48
51. investor The Group ’s Investor Relations initiative for the year was centered on ensuring that the investment community had a thorough understanding of the Forward23 5-year strategic plan launched in early 2019. Having drawn a line under the previous Target 2018 (T18) program, it was imperative that stakeholders grasped how the Group would leverage on the foundations laid by T18 to accelerate growth in key focus areas to strengthen the digital and technological core to future-proof the Group. With Customer Centricity, Ventures & Partnerships and Sustainability coming to the fore as strategic pivots under Forward23, we took the opportunity to outline how and why these focus areas could prove to be a major differentiator for CIMB. The operating environment was challenging as external regional and global developments took center stage. The backdrop of slower regional economic growth, continued global trade tensions, unexpected monetary policy moves by regional central banks and the corresponding deceleration in corporate activity and weakened consumer sentiment, impacted investor confidence and sentiment. The rapidly evolving landscape has become a norm and the Investor Relations team had to stay on our toes to keep pace with these developments. The Group itself had a comparatively unexciting year in terms of corporate developments with the completion of the disposal of 50% interest in the Malaysian stockbroking business. Management spent significant effort in improving operational efficiencies via automation and partnerships as well as launching a staff transformation program in Malaysia and Indonesia. This entailed a material uplift in operating costs, which had to be clarified and relayed to investors. The announcement of the Group Sustainability Policy and Group Sustainable Financing Policy was defining as it sets a landmark on the way CIMB Group approached business going forward, in line with the increased resonance of environmental, social and governance (ESG) issues within the investment community. 2019 was also a year where CIMB Bank Philippines emerged as the fastest growing bank in ASEAN, accumulating 1.7 million customers within a year of operations. The Group has not wavered from its belief in providing the highest levels of transparency and disclosures where possible, to further inculcate trust and confidence in management. The 5-year Forward23 strategic plan reverberated well with foreign long-only funds, bringing about an increase in the Group’s foreign shareholding over the past 12 months. Nevertheless, issues that weighed on the Group’s share price and financial sector in general, included the Overnight Policy Rate (OPR) cut by Bank Negara Malaysia, slower trade flows and capital market activity arising from the continued US-China trade war and subsequently the political and social unrest in Hong Kong and concerns of encroachment by digital banks and e-payment solution providers into the banking space. The negative external newsflow coupled with decelerating economic growth across the region, brought about an underperformance of the Group’s share price against the market in 2019, although faring comparatively better against most other financial stocks in Malaysia. We ensured that pertinent domestic and foreign stakeholders had regular, consistent and proactive engagements with the upper echelons of CIMB Group management. Significant effort is put in to coordinate direct one-on-one meetings, teleconferences, roadshows and investor conferences to facilitate these engagements, subject to management availability. The Group CEO Tengku Dato’ Sri Zafrul Tengku Abdul Aziz and Group CFO Khairul Rifaie led the investor relation activities with support from the Investor Relations team and selected members of senior management where necessary. These include Shahnaz Jammal (CEO Group Wholesale Banking), Gurdip Singh Sidhu (Group Chief Strategy & Design Officer) and Tigor M. Siahaan (CEO of CIMB Niaga). SIGNIFICANT EVENTS: Date Event 31 January 2019 Completed divestment of 51% interest in CIMB Howden Insurance Brokers Bursa Announcement 28 June 2019 Completed sale of 50% interest in the Malaysia stockbroking business Bursa Announcement 13 September 2019 Appointment of Victor Lee Meng Teck as CEO of CIMB Bank Singapore and Ahmad Shahriman Bin Mohd Shariff as CEO of CIMB Islamic Bank Berhad Bursa Announcement 21 October 2019 Appointment of Adisorn Sermchaiwong as President and CEO of CIMB Thai Bank PCL SET Announcement 49
52. investor relations ANALYST BRIEFINGS The Group conducted investor conference calls for all quarterly announcements of the Group ’s financial performance, which facilitated full participation from domestic as well as regional equity analysts and fund managers. As per previous years, the Group CEO presented the quarterly and annual financial performances and took questions for more detailed discussion and explanation. Other members of senior management were on hand to take on more business-specific and operational queries. Press conferences are held twice yearly for the half-year and full-year results to provide the media with opportunities to hear the performance reports directly from senior management. It is the Investor Relations team’s responsibility to ensure that the financial statements and press releases are lodged onto the Bursa Malaysia website, email the documents along with the investor presentation to all relevant stakeholders and upload to the Group’s website under the Investor Relations segment. ANNOUNCEMENT OF FINANCIAL RESULTS: Type of Meeting Date Event 29 May 2019 CIMB Group 1Q19 Results Conference Call 29 August 2019 CIMB Group 2Q19 Results Conference Call 22 November 2019 CIMB Group 3Q19 Results Conference Call 28 February 2020 CIMB Group 4Q19 Results Conference Call AGM/EGM The Board of Directors addressing shareholders at the 62nd AGM. The Annual General Meeting (AGM) is arguably the Group’s most important event each year where shareholders gather to meet, listen to and engage with senior management. CIMB Group’s 62nd AGM on 22 April 2019 was equally engaging with the Group CEO presenting the 2018 financial performance and report card on the T18 achievements. He subsequently unveiled the Forward23 5-year strategic roadmap by explaining the rationale and objectives of the five key pivots to an appreciative audience. The follow-up shareholder engagement was stimulating with an interactive audience providing a wide range of questions, feedback and 50 opinions to both the Board of Directors and senior management. Official responses were provided to several shareholders and the Minority Shareholders Watchdog Group (MSWG). Management took note of queries that could not be immediately addressed and responded directly to the shareholders post-AGM. Topics raised at the 62nd AGM included operational prospects for CIMB Niaga and CIMB Thai, loan growth and NIM outlook, the Board’s remuneration structure and asset quality.
53. INVESTOR MEETINGS Investor meetings form the crux of the Investor Relations initiative as this allows senior management to engage investors on a personal basis . For 2019, the Group conducted 85 investor meetings, a notable decrease from the 102 in 2018 largely owing to the cancellations of conferences and non-deal roadshows (NDR) following the unrest in Hong Kong in the second half of the year. Given the macro developments and the reduction of business travel and events, the Group ensured that we maintained as strong an engagement as possible with stakeholders while continuing high levels of disclosure and transparency. NO. OF MEETINGS/NO. OF FUND MANAGERS AND ANALYSTS Nevertheless, the number of buy- and sell-side analysts and fund managers met were similar at 385 versus 399 last year as we improved the efficiency of meetings particularly on NDRs. Other than one-on-one and small group meetings, the Group continued to conduct twelve regular larger-group meetings per annum; eight pre-closed period meetings with the domestic buy- and sell-side, and four quarterly financial announcement investor briefings and conference calls. CIMB Niaga also saw a slight decline in the number of meetings and investors met in 2019 as a result of the macroeconomic developments. CONFERENCES AND ROADSHOWS 2018 Meetings CIMB Group 2019 FM/ Meetings Analysts FM/ Analysts In-house meetings 37 233 38 199 Conferences 22 106 Non deal roadshows 29 43 19 85 18 86 Teleconferences 14 17 10 15 102 399 85 385 In-house meetings 16 52 12 48 Total 16 52 12 48 Total CIMB Niaga It is pertinent for members of senior management to meet with institutional and strategic stakeholders to provide up-to-date developments on the Group and the operating environment. Apart from in-house meetings, these are also best conducted off-site at regional conferences and on NDRs. The Group CEO and/or CFO participated in various events over 2019 to brief investors on the Group’s Forward23 strategic plan, update on financial performance and discuss all matters relating to the financial industry. 2019 brought us to Singapore, Hong Kong and London for both conferences and NDRs with several reverse roadshows in Kuala Lumpur. We participated in our first Sustainability Conference in Singapore where we had the opportunity to listen to and engage with ESG-focused buy-side investors. With the lower number of events attended in 2019 due to unexpected events, we had just 37 meetings out of the office during the year compared to 51 in 2018. Nevertheless, the scarcity of meetings translated to greater interest as we met 171 fund managers and buy-side analysts in 2019 versus 149 the year before. We continue to utilise the share register analysis to identify and earmark stakeholders who need to be engaged. CONFERENCES AND ROADSHOWS Date Event Location Organiser 3 January 2019 CIMB 11th Annual Malaysia Corporate Day Kuala Lumpur CIMB 12 March 2019 UBS Malaysia Corporate Day Singapore UBS 25 March 2019 Credit Suisse 22nd Asian Investment Conference Hong Kong Credit Suisse 8 – 9 April 2019 Non-Deal Roadshow London Macquarie 18 June 2019 Macquarie ASEAN Banks Tour Kuala Lumpur Macquarie 4 September 2019 Non-Deal Roadshow Singapore JP Morgan 18 September 2019 BNP Paribas Sustainable Future Forum 2019 Singapore BNP Paribas 20 September 2019 UBS ASEAN Conference Kuala Lumpur UBS 51
54. investor relations RESEARCH COVERAGE CIMB Group remains well covered by the investment community given its position as the fifth largest company by market capitalisation on Bursa Malaysia as at end-2019 and a core component of the FBMKLCI Index . The Group remains the second largest financial institution in Malaysia by assets and the fifth largest in ASEAN. As of end December 2019, the stock had active coverage by a total of 22 analyst and research houses, and continues to be well tracked by buy-side analysts and fund managers domestically, regionally and globally. No Research House 1 Affin Hwang Investment Bank 2 AllianceDBS Research 3 AmInvestment Bank 4 Bernstein Research 5 BofA Global Research 6 Citi Investment Research 7 CLSA Securities 8 Credit Suisse Securities 9 Hong Leong Investment Bank 10 JP Morgan Securities 11 KAF-Seagroatt & Campbell Securities 12 Kenanga Investment Bank 13 Macquarie Capital Securities 14 Maybank Investment Bank 15 MIDF Amanah Investment Bank 16 Morgan Stanley Research 17 Nomura Securities 18 Public Investment Bank 19 RHB Research 20 TA Securities 21 UBS Securities 22 UOB Kay Hian SHARE PRICE PERFORMANCE AND FOREIGN SHAREHOLDING 2019 was not the best of years for Malaysian equities performance as the continued trade tensions and tumultuous global developments exerted persistent downward pressure. Coupled with the less favourable rebalancing of the MSCI indices, the benchmark FBMKLCI declined by 2.8% for the year. As a result, the Group’s share price performance was not spared as it eased by 5.0% over the 12-month period to end the year at RM5.15 compared to the adjusted opening price of RM5.42, translating to a 2.2% underperformance versus the FBMKLCI in 2019. Nonetheless, CIMB Group outperformed the wider Malaysian financial sector (KLFin Index) which declined by a greater 10.6% in 2019. From a financial performance perspective, the Group met its targets for ROE, loan growth, CET1 ratio, dividend payout and loan loss charge. Apart from external market-related factors which impacted revenues, the Group embarked on an investment phase under its Forward23 5-year strategic plan, which brought about a sharper than normal increase in operating expenses and a subsequent miss of the Group’s CIR target for the year. The interest rate cuts across the region also contributed to the negative impact on NIMs, particularly in Malaysia. Despite the weaker market and operating environment, the Group witnessed an uptick in its foreign shareholding to 30.2% as at end-2019 compared to 25.9% at the end of 2018 – or an increase of 4.3% YoY. Whilst this increase was aided by the transfer of shares by Khazanah Nasional to its trustees in conjunction with its issuance of USD500 million in exchangeable bonds exchangeable into CIMB Group shares, the underlying foreign shareholding would still have risen by around 1.0% for the year. CREDIT RATING Credit ratings play an integral part in how the Group is viewed by institutional investors, counterparty financial institutions, current and potential business partners as well as direct and indirect external stakeholders. The Group actively engages the following domestic, regional and global rating agencies – Moody’s Investors Services, Standard and Poor’s (S&P), RAM Ratings, Malaysian Rating Corporation (MARC) and Fitch Ratings – to provide credit ratings for the Group and its licensed banking subsidiaries. This is done on both a solicited and unsolicited basis to provide sufficient local- and foreign-currency rating coverage. The investor relations team manages the relationship with rating agencies via continuous engagements, particularly during rating review periods with senior members of management through the year. Detailed financial explanations, data points and strategic discussions equip the rating agencies with the latest information in their evaluation process. The two-way relationship also allows the Group to receive the latest views and developments on global financial markets, economies and developments. 52
55. CIMB Group Share Price and Volume 120 5 .8 5.6 100 5.4 80 5.2 60 5.0 40 4.8 20 4.6 4.4 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Volume (’mil) (RHS) Aug 19 Sep 19 Oct 19 Nov 19 0 Dec 19 Price (RM) (LHS) CIMB Group Foreign Shareholding 32 30 29.4% 29.5% Jul 19 Aug 19 29.7% 30.0% 30.3% 30.2% Nov 19 Dec 19 28 26 25.9% 25.8% Dec 18 Jan 19 26.2% 26.2% 25.6% 25.5% Mar 19 Apr 19 26.5% 24 22 20 Feb 19 May 19 Jun 19 Sep 19 Oct 19 53
56. investor relations Shareholders ’ Returns (6 June 2005* – 31 December 2019) 500 450 400 50.6% 350 300 250 200 150 1 YEAR 100 50 0 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 FBMKLCI Index 14.5 YEARS CIMB -5.0% 258.9% FBMKLCI -2.8% 208.3% Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Dec 19 CIMB Note: *Date of announcement of the M&A between CIMB Berhad and CAHB 5-year Foreign Shareholding Trend (December 2014 – December 2019) 40 35 30 30.2% 25 20 54 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19
57. financial 28 FEBRUARY 2019 14 MARCH 2019 21 MARCH 2019 21 MARCH 2019 Announcement of the unaudited consolidated financial results for the fourth quarter and financial year ended 31 December 2018 Notice of book closure for single tier second interim dividend of 12 .00 sen per share for the financial year ended 31 December 2018 Notice of 62nd Annual General Meeting Issuance of Annual Report for the financial year ended 31 December 2018 25 MARCH 2019 29 MARCH 2019 22 APRIL 2019 24 APRIL 2019 Date of entitlement for the single tier second interim dividend of 12.00 sen per share for the financial year ended 31 December 2018 Notice of election in relation to the dividend reinvestment scheme. The scheme provides the shareholders with the option to elect to reinvest their cash dividend in new ordinary shares of CIMB 62nd Annual General Meeting Payment of the single tier interim dividend of 12.00 sen per share for the financial year ended 31 December 2018 24 APRIL 2019 29 MAY 2019 29 AUGUST 2019 24 SEPTEMBER 2019 Additional listing of 162,964,518 new ordinary shares, via the Dividend Reinvestment Scheme Announcement of the unaudited consolidated financial results for the first quarter ended 31 March 2019 Announcement of the unaudited consolidated financial results for the second quarter and half year ended 30 June 2019 Notice of book closure for the single tier first interim dividend of 14.00 sen per share for the financial year ending 31 December 2019 4 OCTOBER 2019 11 OCTOBER 2019 6 NOVEMBER 2019 6 NOVEMBER 2019 Date of entitlement for the single tier interim dividend of 14.00 sen per share for the financial year ending 31 December 2019 Notice of election in relation to the dividend reinvestment scheme. The scheme provides the shareholders with the option to elect to reinvest their cash dividend in new ordinary shares in CIMB Payment of the single tier interim dividend of 14.00 sen per share for the financial year ending 31 December 2019 Additional listing of 195,547,322 new ordinary shares via the dividend reinvestment scheme 22 NOVEMBER 2019 28 FEBRUARY 2020 Announcement of the unaudited consolidated financial results for the third quarter ended 30 September 2019 Announcement of the unaudited consolidated financial results for the fourth quarter ended 31 December 2019 2 0 2 0 T E N TAT I V E DAT E S 19 MAY 2020 26 AUGUST 2020 1Q20 Financial Results 2Q20 Financial Results 24 NOVEMBER 2020 FEBRUARY 2021 3Q20 Financial Results 4Q20 Financial Results 55
58. group consumer banking by Samir Gupta “During the year, we continued to drive business growth and key focus areas towards Forward23 aspirations amidst various market challenges. We kept our momentum in balance sheet growth while accelerating efforts in digital banking, analytics, innovation and process re-engineering towards providing best-in-class customer experience. Our market leadership was reinforced as we received the Best Retail Bank award for the third consecutive year and the Best Digital Bank award for 2019 in Malaysia. Overall, we remained committed to driving banking excellence, delighting customers and contributing towards achieving the Group’s Forward23 objectives.” WHO WE ARE & WHAT WE DO FINANCIAL PERFORMANCE Financials (ex-SME) AWARDS & RECOGNITION 56 63,046 2018 2019 FD (RM million) Revenue (as reported) (RM million) 2018 2018 2019 12.0% YoY 2019 6.9% YoY 7,242 8.9% YoY 113,739 With the advent of Industrial Revolution 4.0 (IR 4.0), we continued to emphasise on “data-first” approach by augmenting and expanding our digital capabilities. We continued leveraging big data and advanced analytics for targeted acquisition; identifying new revenue initiatives and cost saving opportunities; reducing turn-around-time (TAT); improving customer experience (CX), and enhancing sales productivity through digital sales enablement. We contained costs through prudent cost management and various cost savings initiatives while continuing to invest for the future. 2019 2.3% YoY 2018 2019 22.4% YoY 2018 203 Transactions on Mobile App 9.5 Registered Users on Mobile App 120 Digital Services Take Up (#‘m) 7.8 In 2019, innovations and product proposition refreshes were implemented to stay attuned to the changing consumer behaviour. We have improved and refreshed our flagship Internet Banking apps across the region to pack new features and added convenience. Several credit card propositions were refreshed to give added benefits to customers. We have also launched a regional deals platform for customers to avail regional deals and offers. At the core, we are differentiating ourselves through personalised banking. Supported by big data analytics, we are now able to provide personalised deals and offerings to our customers. 2018 2019 9.0% YoY 7,411 2018 179,012 CASA (RM million) 184,953 Overall, we registered positive performance across all our regional markets. The key growth drivers included mortgages, personal loans, auto loans and deposits. We grew our market share in Malaysia and Indonesia for mortgages and deposits. Deposits (RM million) 101,569 OUR GROWTH DRIVERS IN 2019 Loans (RM million) 58,977 Tapping the potential of digital, big data and advanced analytics, backed by a holistic product proposition and an integrated regional universal banking franchise model, we aim to deliver superior customer experience. 164,402 While competition remained intense, balance sheet growth was resilient, with loans growing steadily at +9.0% YoY, mainly driven by Malaysia and Thailand. Deposits grew +8.9%, driven by growth in both CASA at +6.9% YoY and FD at +12.0% YoY. In 2019, the Group Consumer Banking division registered a +2.3% YoY revenue growth on the back of higher balance sheet growth and wealth management income recovery. This is despite spread compression and rate cuts. Direct expenses were managed well, but was offset by higher support costs. Overall, PBT was lower YoY as a result of slower revenue growth, higher provisions compounded by one-off MFRS9-related adjustments and higher support costs. 169,714 We provide conventional and Islamic banking solutions to individual customers and small businesses. Our range of products include deposit accounts; loans; personal financing; credit cards; wealth management and investments; bancassurance; remittance and FX. These offerings can be accessed through multiple delivery channels, i.e. online banking, mobile banking, self-service banking via ATM terminals, phone banking, all of which allows financial transactions to be performed beyond normal banking hours. Products & services are also accessible over-the-counter in all our branches regionally. 2019 70.1% YoY *D  igital Banking stats are regional (MIST) AWARDS AWARDING BODY Best Retail Bank in Malaysia The Asian Banker Best Digital Bank in Malaysia The Asian Banker Retail Banker of the Year in Asia Pacific 2019 – Samir Gupta The Asian Banker
59. H I G H L I G H T S 2 0 19 KEY INITIATIVES RESULTS STRENGTHEN POSITION AS THE LEADING DIGITAL BANK • Launched Clicks One App: The only app in Malaysia offering personalised offers and “always on” home screen enabling for clicks fund transfer of up to RM250. • Augmented OctoMobile in Indonesia, offering new innovative features such as account opening with online KYC, QR payments, cardless ATM transactions, etc. • Launched new CIMB TH Digital App with digital account opening and wealth management capabilities. DIGITAL SALES ENABLEMENT • Launched EzForm for credit cards and CashPlus loans in Malaysia – an improved process to empower staff referrals/submissions via mobile phones. • Rolled-out digital acquisition platform in Malaysia and Singapore offering customers straight through application processes. ANALYTICS DRIVEN REVENUE & COST OPTIMISATION • Deployed advanced analytics for lead generation, creation of customised offers and branch network realignment initiatives. • Optimised branch footprint while realising cost reduction regionally. • Introduced machine learning for optimisation in AML Alerts. • Implemented Robotic Process Automation in Indonesia, contributing to cost optimisation. • Registered app users up by +24.3% ; app transactions up by +54.5% • Registered app users up by +18.9% ; app transactions up by +89.3% • Recognised as the 1st Bank in Thailand to allow app-based primary bond subscription • Simplified process and more user-friendly; Faster TAT • Significant uplift in sales volume e.g. MY CashPlus, SG FastSavers and credit cards. Potential to replicate for other countries. • >RM100 million revenue and cost optimisation opportunities identified • Productivity remained robust, with loans per staff up by +16.6% YoY and deposits per staff up by +13.2% YoY • AML alerts reduced by -40% • Recognised for Best Productivity, Efficiency & Automation for Contact Centre, Speech Analytics & Robotic Process Automation by The Asian Banker C H A L L E N G E S & R I S K M I T I G AT I O N CHALLENGES/RISK MITIGATION STRATEGIES RESULTS Regulatory Compliance: Higher and stricter standards of compliance coupled with the introduction of new regulations and standards. • Embraced a zero-tolerance culture for non-compliance and stakeholder management. • Adopted data-driven risk management policies and implemented risk-based pricing strategies. • Reduced operational lapses. • Enhanced risk profile and returns on risk adjusted capital. Rapid Technology Change and Disruption: Pressure to re-skill and allocate more investments in technology in keeping with the pace of change. • Enhanced budgets to enable technology change, system resiliency, hiring, compliance and Fintech – all for business growth. • Introduced value-added digital banking services & increased digital sales delivery. • Encouraged data-driven sales and risk management. • Improved system uptime & successful roll out of new digital banking services. • Increased sales and achieved better sales fulfillment rates through data-driven acquisition. A NEW BEGINNING – Customer Experience through Personalised Banking: • Customer experience remains top priority and we endeavour to provide a personalised banking experience through tailored products, services and offers. • This is achieved by digital banking expansion and affluent banking supported by big data/real-time engine, transforming customer journeys and customer value management initiatives. OUTLOOK & PROSPECTS In the year ahead, we remain cautiously optimistic as the industry will continue to see margin compression, central bank rate cuts and global headwinds resulting from possible geopolitical conflicts and trade wars. High customer expectations, coupled with continuous industry disruption and the advent of new digital banks in view of issuance of new digital banking licenses in near future will determine relevance and competitiveness. We will continue to innovate to stay ahead. Customer experience remains top priority and FOCUS AREAS Digital Banking Leadership: • Enrichment of flagship mobile banking applications with great UI/UX, valueadded features, online account opening via eKYC and straight through application functions for products. • Introduction of personalised and tailored deals powered by big data engine. Affluent Banking and Wealth Management Leadership: • Recalibration of sales operating model with specialised sales roles focussing on Preferred Banking customers. • Enhanced Preferred Banking value proposition, focussing on regional privileges, large suite of value-added wealth management products, seamless onboarding journeys, relationship-based pricing and digital wealth. we will differentiate ourselves through providing a personalised banking experience (by way of tailored products, services and offers, real time processing, innovative apps, electronic on-boarding etc.), supported by big data and analytics. recognition. With these in place, we endeavour to establish leadership in the area of digital banking, Preferred Banking and wealth management. Our suite of internet and mobile banking solutions will evolve to be more simplified, user friendly, intelligent and personalised offering, complementing our digital acquisition strategy powered by instant decisioning and new technology such as optical character As the leading consumer bank in ASEAN, we expect to sustain growth and profitability through innovation, continuous process improvement, efficient cost management and service excellence as we move the franchise towards meeting its Forward23 goals and being the leading consumer bank in ASEAN. 57
60. group commercial banking by Victor Lee Meng Teck “2019 has been a good year for Group Commercial Banking. Commercial Banking turned in a good set of financial performance. We bolstered our value proposition for both SME banking and Business Banking segments. In Malaysia, we outperformed the market in the SME space. Our SME business grew double digits while the industry contracted by 1%. In 2019, we made a commitment to disburse RM15 billion in SME loans in Malaysia in two years. As of end 2019, we have successfully disbursed more than half of the committed amount. Anchored on principles of Sustainability and Customer Experience, we accelerated our commitment in the backbone of every country in the SME and Business Banking space, forging strong relationships with existing customers and growing new customers. The year also saw us building our digital ecosystems and partnerships. With our resolve in this phase of digitalisation, we expect to bear fruits in the coming years.” WHO WE ARE & WHAT WE DO OUR GROWTH DRIVERS IN 2019 We are a regional business, providing comprehensive financial solutions, both conventional and Islamic, to non-retail segments, ranging from small and medium sized enterprises (SMEs), to mid-corporates. We have the benefit of a clearly defined Forward23 strategy for Group Commercial Banking to navigate us through 2019 and the coming years ahead with a focus on improving asset quality management, leveraging on Credit Guarantee Schemes to minimise risks, as well as setting up a Regional Operating Model, with a Centre of Excellence, sharing and implementing best practices across the Region. We adopt an integrated marketing approach with regards to our financial product and services, which are tailored to meet the individual needs of our customers. Our end-to-end services include credit facilities, as well as cash management solutions; treasury and structured products. These are made available to our customers through multiple channels such as online banking, our dedicated relationship managers, SME and business centres; as well as CIMB’s extensive branch network across the region. FINANCIAL PERFORMANCE The Group Commercial Banking saw an upswing in profit before tax, propelled by sustained growth in loans and significant improvement in asset quality. Malaysia, Indonesia and Cambodia were the key levers in delivering the bottom line. The sale of non-performing assets in Indonesia, as well as improved loan loss charge and impairment ratio across the board further strengthened the financial outcomes for the year. 87% YoY 2019 2018 2019 0.1% YoY 2019 65.6 2018 65.0 65.5 65.5 2019 0.1% YoY 65.6 Deposits 101% YoY (RM billion) Deposits (RM billion) 65.5 Loans 87% YoY (RM billion) Loans (RM billion) 2018 58 101% YoY 2018 65.0 2019 2019 65.5 2018 2018 8 write back 8 write back 2019 Provisions (RM million) Provisions (RM million) 630 charge 630 charge 860 2018 1,609 1,609 860 Profit Before Tax (RM million) Profit Before Tax (RM million) 1% YoY 2018 2019 1% YoY In 2019, we adopted a segment-led customer focused strategy for growing our business. Examples of these were the launched Business Premise Plus, a solution that provides working capital funds in addition to asset financing, and programs for solar panel financing targeting the SME business segment. For the micro finance segment, we introduced e-commerce platform based lending with partners such as Lazada and Shopee, as well as through our partner online channel, iMSME. For the larger Mid-Corp and Medium Enterprise segments, we offered tailored working capital and trade financing solutions to complement the more complex needs of these segments. These efforts resulted in us outgrowing industry loan growth. With the proliferation of the digital economy, at CIMB, we continued to build on our inclusive go to market approach by accelerating collaboration with synergistic fintech and digital players in the market. We explored partnership and growth opportunities in the digital ecosystem – from e-Commerce platform providers to peer to peer micro financing for SMEs, as well as Investment Banking solutions, leveraging on frontier technologies such as blockchain. BizChannel, as well as BizLite, which is the lighter version of our online banking platform targeted at our business banking customers, has been a widely accepted platform by CIMB customers in the region. In 2019, we further expanded on our customer experience proposition and seamless banking with the introduction of a mobile app based version of BizChannel. During the year, we also strengthened our business deposits customer value proposition by working closely with our branch network to drive greater customer experience in the on-boarding and servicing process. As a result, we delivered a positive increase in our business deposits growth. Managing and maintaining a high quality commercial asset book is essential to a healthy growth of our segment of business. The year saw our improved loan loss charge, due to our continued high intensity due diligence and reviews, whilst at the same time disposing some non-performing loans. 2019 saw more right sizing of our Thailand business. We exited subscale segments where our risk rewards profile did not justify. This year saw Commercial Banking driving products through its branch network more. We are seeing early success.
61. H I G H L I G H T S 2 0 19 KEY INITIATIVES RESULTS CUSTOMER SOLUTIONS Enhanced working capital solutions in key markets , namely Malaysia and Indonesia. Introduced new offerings such as 160% margin of financing; solar panel and franchise financing; eCommerce merchant micro financing; Quick Cash; and Merchant Plus programme. DIGITAL ECO-SYSTEMS Ramped up our partnerships and collaboration with fin-techs and digital platform players to expand our customer value proposition in the digital eco-system space. This is in tandem with our focus on growing our digital SME proposition in the market. SUSTAINABLE FINANCING Encouraged all CIMB Palm Oil industry customers to be Malaysia Sustainable Palm Oil (MSPO) certified in keeping with our Group Sustainable Financing Policy Higher than industry loans growth in key markets. In Malaysia, we are on track to disburse over RM15 billion in loans to SMEs by 2020. We have entered into various collaborations in Malaysia, with partners such as Axiata, online investment platform Capbridge Pte. Ltd in Singapore, e-Commerce provider Shopmatic, as well as other established platform players such as Lazada and Shopee. We have engaged all our customers, of which 95% of customers are either already MSPO certified or have a clear roadmap to complete their certification within a year. C H A L L E N G E S & R I S K M I T I G AT I O N CHALLENGES/RISKS MITIGATION STRATEGIES RESULTS External headwinds and uncertainties from Brexit and US-China trade war impacted global economy, weakened global trade growth which has weighed on Malaysia’s export sector. Weakened domestic business sentiments and soft commodity prices has also affected performance. Focused on attractive industries that are aligned to Malaysia 2020 vision. Focused on being industry leaders in chosen industries. Positive customer response and take-up of our lending programmes. We are on track to deliver on our promise to disburse RM15 billion in SME loans by 2020. A NEW BEGINNING – Customer Centricity: • Enhanced our customer experience framework through digital enablement, with innovation as the catalyst for customer engagement and delight. FOCUS AREAS Technology & Data: • Devised a segmentation strategy, coupled with an optimal risk reward appetite and credit infrastructure to ensure we are able to deliver the right solutions and services to our customers with diverse interests, needs, and from different geographical areas. OUTLOOK & PROSPECTS In 2020 and beyond, we will elevate our game in delivering our value proposition and delighting our customers. This renewed emphasis is guided by our philosophy in CHIDA – Customer obsession; High performance; Integrity; Diversification and inclusion; and Agility. CHIDA will be apparent in everything that we do for our customers. This includes: Sustainability: • Worked with our customers (especially in Palm Oil) to raise awareness on sectorspecific risks and standards, encouraging them to put concrete action and mitigation plans to improve sustainability practices. Ventures & Partnerships: • Leveraged on internal CIMB assets and capabilities, such as our branch network, Investment Banking, Treasury, as well as Private Banking practice, and business partners to deliver greater value to our SME and business banking customers. • Enhancing our SME digital proposition, with quicker financing access through digital solutions, as well as deeper partnerships and collaboration with platforms players to create an ecosystem based proposition to our customers. • Transforming our key touch points, which are primarily our online banking, as well as branch channels to ensure that we deliver on our promise to our customers at the moment of truth. • Digitalisation and automation of our end-to-end credit processes, to improve turn-around time; simplify credit application process; and provide transparency for customers. 59
62. During the year , our focus has been to offer a seamless banking experience to our customers. We strengthened our digital capabilities via collaboration with technology partners in e-procurement to bring cost-effective e-supply chain financing solutions to the supplier community. The integrated procure-to-pay and supply chain financing allow suppliers to access lower cost of funds by leveraging on large corporate buyers’ good credit rating. In October 2019, we completed our first structured trade financing using a blockchain platform and IoT cargo sensor technology for imports into China. The platform provides secure real-time tracking of cargo in transit as well as in the warehouse using blockchain-based technology. This mitigates fraud risk, with alerts to both lenders and customers on any unauthorised movements of the financed cargo. The plan is to scale up the volume of this blockchain-based financing in the next two to three years. 60 157.0 157.0 157.0 150.2 150.2 150.2 2018 2019 2019 2018 Wholesale Banking 9.2% YoY Loans (RM billion) Banking Wholesale Loans Thailand Wholesale Banking Others (RM billion) 10.0 5.9 Loans Thailand (RM billion) Malaysia Others Singapore 10.0 20.8 Thailand Singapore 10.0 20.8 Indonesia 23.1 Singapore 20.8 Indonesia Total 23.1 Indonesia Total 23.1 5.1% YoY 2018 2019 9.2%2019 YoY 2018 59.3 5.9 OthersMalaysia 5.9 59.3 Malaysia 59.3 119.1 2019 1.9 2018 2019 9.2% YoY 2019 1.9 2018 1.9 4.5% YoY Profit Before Tax 2018 2019 (RM billion) 4.5% YoY Profit Before Tax (RM billion) Profit Before Tax (RM billion) 1.8 2018 2019 4.5% YoY 7.2%2019 YoY Revenue 2018 (RM billion) 7.2% YoY Revenue (RM billion) Revenue (RM billion) 1.8 Alongside positive financial performance, we have taken tangible measures to improve our EES (Economic, Environmental, Social) orientation and performance in planning our financing activities. During the year, we started working on Sustainability Linked Loans (SLLs), financing instruments where corporate borrowers receive financing incentives upon achieving preagreed sustainability performance targets. SLLs were officially launched in January 2020. This is part of our commitment to help support our clients manage their EES risks and future-proof their businesses. 2018 2019 7.2% YoY 1.8 We have yet again demonstrated resilience in a challenging business environment. Our Treasury & Markets business registered commendable top and bottom line growth year-on-year. Our Corporate Banking, Private Banking and Financial Institution segments also delivered healthy YoY growth in revenue. 119.1 119.1 119.1 The year 2019 started with uncertainty on the back of rising US-China trade tensions, dragging regional and global economic growth. Policy rate cuts by Central Banks in our key markets also impacted overall banking performance. 2018 4.9 OUR GROWTH DRIVERS IN 2019 Wholesale Banking Deposits (RM billion) Banking Wholesale Deposits Wholesale (RM billion) Banking Deposits (RM billion) 4.9 In line with the Group’s footprint, our key value proposition is our regional presence, platforms and solutions. Our cross-border regional operating model (ROM) equips us with the capabilities to offer insights on regional markets and bespoke products with sustainable returns. In doing so, we also deliver best-in-class and seamless customer experience across all markets. Wholesale Banking Loans (RM billion) Banking Wholesale Loans Wholesale (RM billion) Banking Loans (RM billion) 4.9 We are also one of the top brokers in the region through CGS-CIMB, our joint-venture with China Galaxy Securities, where we have one of the most comprehensive research coverage of equities, fixed income and economics, as well as our award-winning i-Trade online trading platform that provides access to Asian and US markets. Our regional Private Banking service offers customised advisory, portfolio planning and wealth management solutions for high net-worth individuals. Wholesale Banking contributed positively to the Group’s improved revenue and balance sheet during the year. Revenue increased by 9.2% YoY, mainly due to improving market sentiment as well as solid loan and deposit growth. Wholesale Banking loans grew by 7.2% YoY, whereas deposits were up by 4.5% YoY. The Financial Institutions Group (FIG) and Private Banking (PB) segments contributed to YoY revenue growth of 44% and 19% respectively. Our Treasury & Markets’ revenue and profit before tax recorded impressive 23% and 49% growth rates YoY, respectively. Wholesale Banking’s cost-to-income ratio also improved, mainly due to continued systematic cost saving efforts. 111.1 111.1 111.1 We are a leading Wholesale Banking franchise in ASEAN, catering to the banking needs of corporate and institutional clients. Our regional banking solutions include capital market fund raising; corporate advisory services; mergers and acquisitions (M&A); cash management; funding solutions ranging from traditional trade and capital expenditure financing to structured trade, value-chain, project, M&A and leverage financing; structured investment; risk management; fixed income; currency and commodities (FICC) and equity derivatives. Our products are distributed across various customer segments – from retail and high net-worth individuals to SMEs, Corporates and Financial Institutions. FINANCIAL & NON-FINANCIAL PERFORMANCE 4.5 WHO WE ARE & WHAT WE DO 4.5 by Shahnaz Jammal “Despite a challenging operating environment, we recorded healthy growth in wholesale banking loans at 7.2% YoY and higher Private Banking assets under management (AUM) by 19.3% YoY at RM65.5 billion. Our Treasury & Markets business achieved commendable double-digit growth in profit before tax. During the year, we were the sole principal advisor to a major Oil & Gas client executing Malaysia’s largest block trade of RM6 billion. This is in addition to our first ever Formosa Sustainable Development Goals (SDG) Bond of USD680 million issued by a Malaysian and ASEAN issuer in the international capital markets. We are proud to have successfully achieved a balance between delivering positive growth and financial performance, and demonstrating our responsibility to champion sustainable development.” 4.5 group wholesale banking 5.1%2019 YoY 2018 Wholesale Banking 5.1% YoY Deposits (RM billion) Banking Wholesale Deposits Thailand 6.8 Banking Wholesale Others (RM billion) Singapore 5.0 Deposits 8.0 Thailand (RM billion) Malaysia 6.8 Others Indonesia 122.6 Singapore 14.6 Thailand 5.0 8.0 6.8 Others Malaysia Indonesia Singapore 5.0 122.6 14.6 8.0 Malaysia Indonesia 122.6 14.6 Total 157.0 119.1 Total 157.0 Total 119.1 Total 157.0
63. AWARDS & RECOGNITION AWARDS AWARDING BODY Best Investment Bank (Malaysia) Euromoney Awards for Excellence Asia 2019 Corporate and Investment Bank of the Year (Indonesia) Asian Banking and Finance – Corporate & Investment Banking Awards 2019 Best Investment Bank; Best Private Bank; Best Equity House; Best DCM House (All for Malaysia) Finance Asia Country Awards 2019 Best Bond House in Southeast Asia Alpha Southeast Asia Best Deal & Solution Awards 2019 H I G H L I G H T S 2 0 19 KEY INITIATIVES RESULTS COST MANAGEMENT Continued to drive cost-saving initiatives through process improvement; a cost-conscious culture and mindset; and leveraging our regional operating model. Continuous improvement in cost-to-income ratio from 49% in 2018 to 47% in 2019. JAW was positive at 5%. CUSTOMER SOLUTIONS Introduced seamless, secure, and cost-effective financial solutions to support customers’ growth through innovation and technology. Completed first structured trade financing transaction using Blockchain platform and announced collaboration with technology partners to provide e-supply chain financing solutions to the supplier community. POSITIVE IMPACT FINANCING Accelerated efforts to design and launch sustainable financing products and solutions, positively contributing to our EES agenda and performance. Launch of the first ever Formosa Sustainable Development Goals (SDG) Bond of USD680 million issued by a Malaysian and ASEAN issuer in the Reg-S international capital markets. Launch of SLLs worth RM3 billion to incentivise corporate borrowers to enhance their EES efforts. C H A L L E N G E S & R I S K M I T I G AT I O N CHALLENGES/RISKS MITIGATION STRATEGIES RESULTS Escalating Trade Tensions: Slower industry and loan growth, lower Net Interest Income (NII) from rate cuts in Malaysia, Indonesia and Thailand. Leveraged on our Regional Operating Model (ROM) and focused on growing loans and deposits. Group corporate loans reported positive growth at 2.0% YoY, mainly contributed from Malaysia, Indonesia and Thailand. Higher Customer Expectations & Rising Costs: Expectations of customers for digitalisation and increased investments in technology affecting operating costs. Disciplined costs across business units and geographies through systematic investments – all towards offering personalised customer solutions. Wholesale Banking achieved 9% YoY Revenue growth with healthy Cost-to-Income Ratio and positive JAW of 5%. Disruptive Industry: Entry of non-traditional players, especially in the retail segment of Treasury products. Collaborated with high-potential technology companies to strengthen our value proposition (e.g. e-Supply Chain Financing Solutions). Completion of first trade financing with blockchain technology for imports from New Zealand to China. A NEW BEGINNING – Customer Centricity: • Initiatives to adopt a holistic regional and integrated Customer Relationship Management (CRM) for all Treasury products to offer customised solutions to our customers swiftly and comprehensively. FOCUS AREAS Technology & Data: • Accelerating revamp of technology platforms to improve customer experience. • Digitalising customer on-boarding and process automation. OUTLOOK & PROSPECTS As we have entered the second year of our 5-year strategy, our focus is on accelerating execution of our key strategies. Our priority will be to continuously seek opportunities to drive sustainable growth and create value for our stakeholders. In doing so, we will remain vigilant about downside risks of the current economic environment. Our main efforts will be channelled towards proactive management of costs, systematic investments and continually improving the credit quality of our portfolios. Sustainability: • Introduced Sustainable Financing for targeted corporate customers. • Collaborating with development organisations on Green Financing. In 2020, amongst other business aspects, our focus will be on: • Growing our market share across Malaysia, Indonesia, Singapore and Thailand (MIST), mainly to offer competitive products and pricing to our customers; • Reinforcing our position as the preferred banker of our targeted corporate customers; • Extending our support and substantiating the Digital Transformation efforts of the Government; Our People: • Conduct targeting training to enhance staff’s understanding of sustainable financing within the CIMB framework. • Participation in CIMB’s 3D Foundation and Intermediate programmes. • Leveraging our ROM to strengthen our position as the “Go To” bank for ASEAN businesses; • Furthering our China Strategy to support China-ASEAN trade flows and FDIs; and • Building our sustainable financing portfolio to maximise the bank’s positive impact to EES and focusing on maintaining good asset quality. 61
64. group transaction banking “The Group Transaction Banking recorded a healthy 6% growth in revenue as well as a double-digit client-base growth in 2019. Our efforts to diversify our income structure from NII to NOII towards building a sustainable business gained momentum during the year, despite interest cuts across the region. Our key differentiator has been our ability to create value through our products and services, by way of easing clients' pain points in managing their business and financial operations. We will continue to fulfil the changing needs of our clients as the industry transitions into a digital economy.” by Rafe Haneef WHO WE ARE & WHAT WE DO OUR GROWTH DRIVERS IN 2019 We offer a wide range of products and services covering cash management, trade finance, supply chain financing solutions, online banking and securities services to cater to both our corporate and institutional clients across the region. We provide comprehensive end-to-end cash management solutions designed to help our clients manage their payments and collections effectively and maximise their liquidity potential. These services are also offered through our 24/7 online banking platform to facilitate our clients’ business needs at their convenience. Transaction Banking recorded a positive revenue growth across Malaysia, Indonesia, Singapore, Thailand and Cambodia (MISTC) despite the challenging market environment. Our trade finance products cover a comprehensive range – from traditional trade products to structured trade and supply chain financing solutions - designed to cater to our clients’ diverse business needs in domestic and international trade. Deposits growth of 10%, propelled by the two largest contributors, namely Malaysia and Singapore, were the primary drivers for an increase in Net Interest Income (NII) of 5%. Meanwhile, the Non-Interest Income (NOII) grew at 10%, mainly contributed by cash management and trade finance business. We also provide end-to-end securities services solutions via fund accounting services, custody services, corporate trustee and agency services. Our key value proposition is our unique ability to fully facilitate transactions, supply chains and trade flows across ASEAN and beyond. We are the gateway to ASEAN, empowered by our strong networks, comprehensive digital platforms, best-in-class shariah expertise as well as strategic alliances across the ecosystems that represent the economic potential of this diverse region. AWARDS & RECOGNITION 62 With rapid advancements in the digital space, our e-banking users continued to expand, with promising future growth in the segment. As at end 2019, we registered a double-digit growth of 17% YoY in the number of active e-banking clients across the region. Our trade finance business also recorded a commendable growth in 2019, mainly attributed to various strategic interventions. These include our strategy on ecosystem thinking and solutions as well as structured trade finance deals, which recorded an encouraging growth of 13% YoY. Total Revenue (RM billion) Deposits (%) Thailand 5% Singapore 10% 3.0 In 2019, the Group Transaction Banking continued to register a growth of 5% in revenue YoY across the region, with each of our core businesses reporting healthy growth, mainly contributed by Malaysia and Singapore. Our businesses in both Cambodia and Singapore continued to be the two best performing countries in the region, with a double-digit revenue growth YoY. 2.8 FINANCIAL PERFORMANCE Our revenue in 2019 was well diversified, contributed by growth in all our products and services, which we continue to design to address specific needs of our customers. Particularly, we have innovative solutions to solve the costly manual reconciliation processes, tedious transaction matching, inaccuracies, and delayed reconciliation. Our solutions can help clients in driving efficiency through improved reconciliation processes, saving valuable time and resources. 2018 Trade Loans (%) Thailand 9% Cambodia 1% Malaysia 63% Cambodia 2% Malaysia 38% Singapore 31% Indonesia 21% 2019 6% YoY 10% YoY 1% YoY Indonesia 20% AWARDS AWARDING BODY Best Cash Management Bank in Malaysia Alpha SEA Best Financial Institution Awards Best Service Provider – Fintech Partner Malaysia Malaysia e-Payments Excellence Awards (MEEA) TnG Wallet – Best Payments and Collections Solution Malaysia Triple A Asset Asian Awards
65. H I G H L I G H T S 2 0 19 KEY INITIATIVES RESULTS CURRENT ACCOUNT /SAVINGS ACCOUNT (CASA) FOCUS Deployed targeted strategies and multiple campaigns in bigger markets such as Indonesia and Malaysia, mainly to grow our deposit base. In smaller markets such as Thailand and Singapore, we introduced competitive tiered-rates CASA, with fee privileges. ECOSYSTEM PUSH Introduced full-suite of bundled financing solutions, targeting entire sectoral ecosystems to reach out to suppliers, distributors, dealers and buyers amongst others. SEGMENT FOCUS Targeted new segments and strategised to deepen the wallet share for the government and state-owned sectors Improving SME penetration with better synergy between Branches, Business Units and Transaction Banking. Casa balances increased by 10% YoY. Mandated deals with trade limit of RM630 million in the eco-system. Account Receivables Discounting deal. Growth from targeted segments and SME sectors at 28% and 3% respectively. C H A L L E N G E S & R I S K M I T I G AT I O N CHALLENGES/RISKS MITIGATION STRATEGIES Fraud Transactions: Increasing online frauds/cybercrime due to low awareness in the marketplace. Strengthened our standard operating procedures (SOPs) on digital transactions and raise awareness by collaborating with regulators and industry players to tackle the problem as an industry. RESULTS Launch of online fraud monitoring in Malaysia in 4Q2019, and in Singapore in 1Q2020. Implemented more comprehensive screenings for all the documents. Market Volatility: Fluctuating and reduced interest rates and the overall weak market sentiments. A NEW BEGINNING – Customer Centricity: • Responded to customer expectations on financing through end-to-end product solutioning. • Rolled-out downstream and upstream financial solutions for players (in targeted sectors) • Increased income in the first targeted sector by 300% as at 31 December 2019. Diversified the sources of our revenue by tapping new areas with growth potential. Increase in NOII by 10% YoY. FOCUS AREAS Sustainability: • Mobile Banking, designed for simple and easy transactions for SMEs. • In Malaysia alone, we have registered a total of 2,709 SME Mobile Banking users as at 31 December 2019, after 2 months of going live. OUTLOOK & PROSPECTS We expect the volatility of the market to continue in 2020, with more interest cuts in the region. However, our outlook remains positive and we see our business gaining momentum in the region. To further gain competitiveness and market share, we will focus on targeted areas of growth. For instance, we will focus on growing our trade business by developing ecosystem solutions as well as supply chain solutions with our partners and customers. We also plan to drive cross-border transactions by leveraging on our regional operating model. Technology & Data: • Initiating platform revamp exercise to enable an open platform to support business scalability and more importantly support external and partnership integrations. This will propel us to enable digital transactions compared to the traditional paper-based transactions. Investing into data infrastructure to enable advisory services to clients and business insights to monetise our data. We will continue to invest to transform the Transaction Banking business as the businesses are automating and digitalising their financial processes. This will help to improve performance, provide greater digital banking capabilities, as well as improve customer experience. In addition, we are driving swift changes in the way we run our business as the usage of data and analytics expands in improving our products, processes and business insights. 63
66. The TNG e-Wallet saw tremendous growth in its user base and closed 2019 as Malaysia ’s top e-wallet, with 6.8 million registered users and 116,000 merchant partners. TNGD’s trajectory has been driven primarily by a strong acquisition engine, compelling propositions and robust tech proliferation with Ant Financial. We also successfully completed a shareholding consolidation exercise at TNG, with CIMB now owning 100% of the business. AWARDS & RECOGNITION 64 4.2 1.7 2.3 6.8 88,139 1,685,455 CIMB PH Total Customers Acquired 2018 2019 2019 12.5% YoY TNGD new to banking } 28% Annual Active Users (million) 2018 2019 193% YoY PAM AUM (RM million) 4.2 Total Registered Users (million) 2018 2019 145% YoY CIMB PH Total Customers Acquired TNG has to date fitted 900,000 RFIDs nationwide and is now in a position to evolve beyond toll and transport payments. On the public markets front, despite a challenging year we recorded a PBT of RM46 million on our 40% share of PAM’s performance. On the 28% new to private markets portion, we closed off a profitable year on the back banking of continued2018 optimisations 2019 and gains on our equity 2019 investments. 1,685,455 OUR GROWTH DRIVERS IN 2019 On the Partnerships front, we have successfully deployed a merchant micro-financing MVP (minimum viable product) with three platforms – Lazada, Shopee and TNG e-Wallet, and will continue iterating through 2020 and beyond. Over the course of the year, we achieved our targets in establishing an operating model, developing technological baselines and establishing market-driven use cases. PAM AUM (RM million) 1.7 Also within the ambit of GVP is the Group’s digital banking-led operations in the Philippines and Vietnam. Both start-up businesses, CIMB Bank Philippines (CIMB PH) is now recognised as a leading digital banking franchise in ASEAN and CIMB Bank Vietnam (CIMB VN) is undergoing transformation to pivot towards a digital-first model. TNGD recorded growth in user tripling its total 2018 exponential 2019 2018 base, 2019 registered users YoY to 6.8 million and more than doubling its YoY rate to 4.2 million. 145% YoY Annual Active193% User (AAU) 6.8 We also operate a Ventures practice that sees the firm selectively venture into platform-type businesses through equity co-ownerships, to ensure we are able to participate in value creation opportunities in the future. In addition to core ventures such as Touch ‘n Go (TNG) and Touch ‘n Go Digital (TNGD), we also continue to own a 40% stake in Principal Asset Management (PAM) and Principal Islamic Asset Management (PIAM) along with a select equity portfolio of investments. Through active portfolio optimisation and capital management, our Investments practice ensures that the Group’s balance sheet is deployed effectively across its equity investments. CIMB PH acquired at scale and ended 2019 with 1.7 million customers, exceeding expectations in its first year of operation. 88,139 We operate a Partnerships infrastructure that focuses on creating new revenue streams through financial product co-creation and distribution models with digital platform companies, with the goal of ensuring CIMB remains at the forefront of customer buying behaviours as well as value creation in terms of platform economics. TotalPERFORMANCE Registered Users Annual Active Users FINANCIAL (million) (million) Our asset management business performed commendably in 2019, having achieved 12.5% YoY growth in AUM, which closed at RM88.1 billion. 78,321 WHO WE ARE & WHAT WE DO Group Ventures & Partnerships (GVP) was established in January 2019 as one of the Group’s multiple pillars towards future-proofing the franchise. Our work revolves around the core focus of how we tackle external disruptions facing our businesses today, including areas of proliferating financial services within ecosystems, new digital banking business models, as well as financial technology. 2.3 by Effendy Shahul Hamid “Initiated with the mandate of developing the Group’s new and disruptive businesses and value creation streams, GVP was successful in establishing baseline narratives across its practices and achieved all key targets for the year. We kick-started a platformfocused Partnerships infrastructure, our TNG-Ant Financial joint venture grew significantly, and the Group’s first all-digital banking franchise in the Philippines scaled rapidly in its first year of operation. Overall, we recorded healthy momentum going into 2020 and have begun identifying key disruptive levers to accelerate over the next 5 years.” 78,321 group ventures & partnerships } YoY customers in its first year of operation, CIMB PH grew12.5% to 1.7 million driven by a platform-centric operating model and a pure digital infrastructure. Set up with the ability to co-create and deploy financial products on digital ecosystems, we have successfully proliferated a scalable acquisition regime and activated key technology levers instrumental in the pursuit of a sustainable digital banking model. CIMB VN in turn completed the first phase of recalibration with plans afoot to enhance its digital focus in 2020. AWARDS AWARDING BODY Best Digital Bank (CIMB PH) The Asian Banker Philippine Awards 2019 Best Consumer Digital Bank (CIMB PH) Asia-Pacific Global Finance Awards 2019 Fastest Growing Digital Bank (CIMB PH) International Finance Banking Awards 2019 Best Asset Management House in ASEAN (PAM) Asia Asset Management 2019
67. H I G H L I G H T S 2 0 19 KEY INITIATIVES RESULTS Established Partnerships infrastructure & operating model • Team structure established and operationalised early-2019 • Key partnership engagements pursued, resulting in deployment of merchant micro-financing MVP on three platforms – Lazada, Shopee and TNG e-Wallet Successfully leveraged TNG-Ant Financial JV and scaled e-wallet business • Gained significant momentum and scaled rapidly in 2019 • Acquired 6.8 million registered users, 116,000 merchant partners • Achieved AAU rate of 4.2 million Initiated a fully digital, mobile-first franchise in the Philippines • Established key partnership elements critical to digital operating model and distribution • Acquired 1.7 million customers in first year of operation C H A L L E N G E S & R I S K M I T I G AT I O N CHALLENGES/RISKS MITIGATION STRATEGIES RESULTS New and untested Partnerships regime Established multi-disciplined teams and deployed an agile working structure with focus on developing viable use cases with potential partners Successfully engaged multiple platform partners and rolled out MVP on three platforms Limitations in technology to proliferate required propositions Deployed an iterative development process with focus on establishing product foundations, with room for further revisions and improvements down the road First iteration of merchant micro-financing product deployed, pipeline of partnercentric products and tech requirements established with developmental milestones through 2020 Uncertainty with entry into new market in the Philippines Initiated franchise with baseline partnership operating model and a focused product suite Launched CIMB PH anchored on partnership with GCash and began acquiring at scale with a best-in-class savings proposition A NEW BEGINNING – Disruption Mitigation & Futureproofing • Changes in consumer behaviours and the enablement of technology have given rise to disruptive players across various industries. GVP has been designed to address this aspect by pursuing opportunities and orchestrating value creation outside the Group. Platform-collaborative efforts on the Partnerships front, growing of strategic ventures such as TNGD and acceleration of our digital banking businesses will ensure that the Group remains in the forefront of disruptive practices, capabilities and technologies. FOCUS AREAS New Revenue Streams • Through cohesive product distribution and customer aggregation capabilities, platform companies and non-banks are gaining access to customers across the globe, and have also begun originating financial services. As a banking franchise, it is critical to consider new modes of origination and acquisition beyond our established banking channels. GVP’s mandate will be to pursue and capture these opportunities as we evolve our ability to serve customers in the next 5 years. OUTLOOK & PROSPECTS GVP has had a positive start in 2019, having established the right momentum across various practices and achieved key targets heading into 2020. In the year ahead, we aim to double down on areas of building capabilities, driving new propositions, and sharpening our focus on creating value whilst continuing to invest in our businesses through their initiation stages. We will continue to accelerate our Partnerships efforts, focusing on delivering improved tech and product pipelines in addition to market-driven commercial strategies as we look towards opening up new revenue streams with more platform partners. TNGD’s growth continues to look promising, as we begin to realise synergies of our joint venture with Ant Financial in the retail e-payments space. We will continue to invest in the growth of this business in addition to pivoting its revenue strategies. At TNG Group, plans are also underway to pivot the company towards being a transportation ecosystem anchored on RFID use cases. Alternate & Digital Banking Models • Regulatory changes and increasing calls for financial innovation and inclusion are taking place in markets across Asia and beyond, and are in turn reshaping the financial industry. The emergence of fintech players and digital banks are introducing new business models that challenge conventions in terms of how banks can operate. Our digital franchises in the Philippines and Vietnam have begun materialising, and will form catalysts for the Group in view of imminent digital banking policies. CIMB PH has proven its ability to scale well on its current business model. 2020 will see the momentum continue, as well as enhancements to our tech stack and proliferation of digital lending propositions. We aim to see the beginning of data monetisation as we deepen our relationships with platform partners and sharpen our execution. CIMB VN has established the required foundations to grow a digital franchise, and we will begin to see the partnerships pipeline take off as we aim to start acquiring customers at scale in 2020. On the digital banking front in Malaysia, progress in the central bank’s policy and the anticipated issuance of licenses in 2020 are interesting developments to observe. We expect to see the introduction of new players and capabilities in the market. CIMB has begun diligence efforts in this space and will develop a view in due time. 65
68. group islamic banking by Ahmad Shahriman Mohd Shariff “Our initiative to develop the global Halal sector was cited in the 2019 State of the Global Islamic Economy Report as a contributor towards Malaysia ranking number one on the Global Islamic Economy Indicator (GIEI) index. These efforts in 2019 move us towards establishing Islamic and Halal trade financing leadership in some of the world’s largest capital markets. In developing our Halal ecosystem, we have aligned with institutions sharing the same vision, including a leading international bank and various Halal-related bodies within the region. Our goal is to enable local SMEs to strengthen their Halal infrastructure and credentials towards building their global competitiveness.” WHO WE ARE & WHAT WE DO We are the Islamic banking and financial services franchise of the Group with an extensive suite of innovative Shariahcompliant products and services. Our solutions include financing, sukuk, investment banking, transaction banking, banca-takaful and securities services for individual, commercial, corporate and institutional customers across ASEAN. In conducting Islamic business, we monitor and ensure good Shariah governance and compliance across the Group. With the execution of our Islamic First strategy, we aim to extend the value proposition of Islamic products to our customers and the wider public. We aspire to provide world-class Islamic banking and finance solutions, which will progressively integrate environmental, social and governance factors via a value-based approach, a hallmark of Islamic finance. FINANCIAL & NON-FINANCIAL PERFORMANCE 10.8% YoY 2018 2019 16.1% YoY 2018 2019 2019 24.8% YoY 2018 2019 24.8% YoY 2018 1.1 1.1 1.6 1.6 Profit Before Tax CIMB Islamic Bank Berhad Profit Before Tax (RM billion) CIMB Islamic Bank Berhad (RM billion) 1.0 1.0 16.1% YoY Profit Before Tax Group Islamic Banking Profit Before Tax (RM billion) Group Islamic Banking (RM billion) 2018 66 2019 1.3 1.3 10.8% YoY 2018 103.1103.1 2019 Deposits & Investment Account Deposits & Investment Group Islamic Banking Account (RM billion) Group Islamic Banking (RM billion) 88.8 88.8 2018 100.0100.0 90.3 90.3 Financing Group Islamic Banking Financing (RM billion)* Group Islamic Banking (RM billion)* 2019 7.8%2019 YoY 2018 7.8% YoY * Includes Restricted Agency Investment Account (RAIA) * Includes Restricted Agency Investment Account (RAIA) OUR GROWTH DRIVERS IN 2019 Overall, regional Islamic financing, including asset under Restricted Agency Investment Account, registered financing growth of 10.8% YoY, closing the year at RM100 billion gross financing. The growth momentum for financing and deposits continued to be supported by the Islamic First strategy, with Islamic financing share of book growing close to 40%, mainly contributed by the consumer and SME segments. The CIMB Halal Corridor strategy and the trade financing challenges faced by SMEs, led us to develop our first-to-market solution, HalalBizReady. This will equip the critical mass of high-potential and export-ready SMEs with necessary financing to build a robust Halal infrastructure. In addition to providing working capital, with the help of our local and international partnerships, we will facilitate access to global Halal networks as well as internationally recognised standards and certifications. In response to the growing consumer demand, and backed by our strong partners, Takaful Ikhlas and Berjaya Sompo, we expanded our General Takaful protection solutions. During the year, we introduced two new products – Islamic Motor and Fire Takaful – into our banca-takaful portfolio. In recognition of the increasing effects of Climate Change, takaful contribution (under Fire Takaful) now offers customers an option to cover their property against losses from natural disasters such as floods in addition to fire or lightning. In 2019, trading and FX gain reported double-digit growth. Islamic Structured Products also saw tremendous growth owing to the relaunch of two products, namely Callable Islamic Range Accruals and Commodity Range Bound transactions, further strengthening our Islamic wealth management proposition. Regionally, CIMB Niaga Syariah in Indonesia reported accelerated growth and was ranked amongst the top 5 largest Islamic banks in Indonesia in terms of asset size, as at FY2019 published figures. Its deposits and financing books have registered significant growth YoY, at 41.9% and 28.8% respectively. While in Singapore, we secured a financing deal for a local trading company amounting to RM136 million – our largest Islamic financing in Singapore for the year.
69. AWARDS & RECOGNITION AWARDS AWARDING BODY Best Islamic Finance Sukuk House Alpha SEA Regional Islamic Finance Award Islamic Finance House of the Year FinanceAsia House Awards 2019 Best Islamic Bank (Malaysia) Islamic Finance News (IFN) Best Banks Poll 2019 H I G H L I G H T S 2 0 19 KEY INITIATIVES RESULTS CIMB ISLAMIC & THE HALAL ECOSYSTEM Supported by partnership with the Department of Islamic Development in Malaysia or JAKIM, initiated efforts to champion new financing and growth opportunities for SMEs in the Halal space. HALAL TRADE FINANCING AND ISLAMIC BANKING LEADERSHIP Launched promotional initiatives and sponsorships for MIHAS and SimplySiti, which is a popular Halal brand led by Malaysia’s most popular influencer – Siti Nurhaliza. ISLAMIC FIRST CONSUMER BANKING PRODUCT STRATEGY Launched “Kempen Umrah Bersama CIMB Islamic”, focussing on growing Islamic CASA base and build strong association with Umrah in the long term. A NEW BEGINNING – Customer Centricity: • Activated a commercialisation plan and new-to-bank strategies, mainly focused on meeting the needs and expectations of customers in the Halal ecosystem as well as those seeking sustainable financing. • Towards Forward23, we will aim to expand our reach to address markets that are underserved and underbanked. Earmarked RM100 million financing for SMEs to achieve Halal status Development of HalalBizReady for SMEs with access to the expertise of CIMB’s halal-based strategic partnerships 50% increase in brand awareness and our commitment to Halal industry development Opened 24,019 new accounts, with RM63 million in incremental balances as at June 2019 FOCUS AREAS Ventures & Partnerships: • Established partnership with a key international bank and secured membership to their Trade Club Alliance to provide local SMEs access to global Halal networks. • We will continue to identify key synergies and opportunities in the Islamic economy sectors to bring value-added services to our customers. Sustainability: • Partnered with the International Islamic Centre for Education in Islamic Finance (INCEIF) to undertake research on the Renewable Energy (RE) and Energy Efficiency (EE) sectors, including regional benchmarking and gap analysis for products and policies. • Going forward, we are committed towards developing sustainable business financing solutions by ramping up new SME business within the green economy sectors, starting with RE and EE. OUTLOOK & PROSPECTS According to the State of the Global Islamic Economy Report 2019/20, global Islamic Finance assets are expected to reach USD3.47 trillion by 2024. This translates to a 5.5% CAGR over the span of 6 years from 2018. Group Islamic Banking is committed to tap this potential by finding opportunities to create value and offer differentiated solutions to our customers. We will continue to build on our Commercialisation Plan and strengthen our position in the Halal marketplace by offering collective commitment of our local and international partners to catalyse trade financing and capacity building and achieve new growth for SMEs in Halal. Aligned with the Group’s focus on Sustainability and managing the impact of our business on the environment and society, we will remain committed to developing products and solutions within the ‘green’ space. We will also focus on creating an enabling environment for SMEs, who are the backbone of the economy, by facilitating access to knowledge and sustainability practices. In 2020 and beyond, we will continue to explore strategic partnerships, which will bring added-value and improve customer experience within our identified highpriority customer segments across markets that are unique to Islamic. 67
70. board of BOARD COMPOSITION 68 1 Senior Independent Director 5 Independent Directors 2 Non-Independent Directors AGE GROUP 2 50 years & below 4 3 51 years – 60 years 61 years – 70 years
71. LENGTH OF TENURE 33 .33% 0 year – 2 years 33.33% 5 years & above 33.33% 2 years – 5 years Seated from left to right • T E N G K U DATO ’ S R I Z A F R U L T E N G K U A B D U L A Z I Z • DAT U K M O H D N A S I R A H M A D • TEOH SU YIN Standing from left to right • • • • • • GENDER AFZ AL ABDUL RAHIM DATO ’ L E E KO K K WA N ROBERT NEIL COOMBE DATO ’ M O H A M E D R O S S M O H D D I N D I D I SYA F R U D D I N YA H YA A H M A D Z U LQ A R N A I N C H E O N 8 Male 1 Female NATIONALITY 7 Malaysians 2 Non-Malaysians 69
72. board of DATUK MOHD NASIR AHMAD TENGKU DATO ’ SRI ZAFRUL TENGKU ABDUL AZIZ Chairperson/Independent Director Group Chief Executive Officer/ Executive Director Nationality | Malaysian Nationality | Malaysian Age | 65 AC BR CC GN RC Age | 46 Gender | Male Gender | Male  Date of Appointment | 20 July 2015  Date of Appointment | 27 February 2015 Length of Tenure | 4 Years Length of Tenure | 5 Years Q UA L I F I C AT I O N • Fellow, Associate of Chartered Certified Accountants (ACCA), United Kingdom • Chartered Accountant, Malaysian Institute of Accountants (MIA), Malaysia • Masters in Business Administration (Finance), Universiti Kebangsaan Malaysia, Malaysia AREAS OF EXPERTISE • Accounting and Audit, Operations, Human Resource, Strategy Development and Implementation D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Listed Entities • Nil Public Companies • Independent Director of CIMB Bank Berhad • Chairperson/Independent Director of CIMB Bank (Cambodia) PLC • Independent Director of SIRIM Berhad R E L E VA N T E X P E R I E N C E Datuk Mohd Nasir Ahmad was appointed as Chairperson/Independent Director of CIMB Group Holdings Berhad on 20 October 2018. He was the President of MIA from August 2011 to July 2013. In September 2013 he was elected as a Council Member of the ACCA UK and re-elected in September 2016 and November 2019. He brings with him vast experience in the areas of leadership, management, finance and accounting which spans over 40 years, having started his career as a Trainee Accountant with Tenaga Nasional Berhad (TNB) in 1979 and moving on to hold various positions in the Finance Division. In January 1993, Datuk Mohd Nasir was seconded to TNB’s subsidiary company, Malaysia Transformer Manufacturing Sdn Bhd as the Financial Controller before being appointed as Chief Executive Officer (CEO) in June 1994. Q UA L I F I C AT I O N • Fellow, Asian Institute of Chartered Bankers • Master of Arts in Finance and Management, University of Exeter, United Kingdom • Investment Management Certificate, Institute of Investment Management and Research, United Kingdom • Bachelor of Science (Hons) in Economics and Accounting, University of Bristol, United Kingdom AREAS OF EXPERTISE • Accounting and Audit, Banking and Finance, Legal, Risk Management, Capital Market, Consumer Marketing, Human Resource, Corporate Leadership, Strategy Development and Implementation, Innovation and Transformation, Learning and Development D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Listed Entities • President Commissioner of PT Bank CIMB Niaga Tbk Public Companies • Chief Executive Officer/Executive Director of CIMB Bank Berhad R E L E VA N T E X P E R I E N C E With over 23 years of experience in the financial services sector, specialising in Investment Banking and change management, Zafrul’s last position was with Maybank Investment Bank Berhad and Maybank Kim Eng Holdings as Chief Executive Officer. He also held senior positions in Citigroup Malaysia, Kenanga Holdings Berhad and Avenue Securities. He also experienced being an entrepreneur by setting up Tune Money Sdn Bhd, Asia’s first “no-frills” online financial service provider. Datuk Mohd Nasir also holds directorships in private companies namely Prokhas Sdn Bhd and CIMB EOP Management Sdn Bhd and is a Trustee of Yayasan Canselor UNITEN. Zafrul is currently a member of the APEC Business Advisory Council (ABAC), representing Malaysia in promoting intra-trade and collaboration within Asia Pacific. Further, as an advocate of Malaysia’s socioeconomic development, he currently sits on the Board of the National Sports Council of Malaysia, in addition to being a Trustee of the Perdana Leadership Foundation. He is also an Honorary Commander of the Navy Volunteer Reserve under the Royal Malaysian Navy. B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E In January 2000, he joined Sharikat Permodalan Kebangsaan Berhad as its CEO. On 1 June 2001, he was appointed CEO of Perbadanan Usahawan Nasional Berhad, a position he held until his retirement on 1 June 2011. BOD AC BRCC GNRC BOD AC BRCC GNRC Chairperson 16/16 Member 16/17 Member 7/7 Member 15/16 Member 16/16 – – – Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 70 Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019
73. TEOH SU YIN ROBERT NEIL COOMBE Senior Independent Director Independent Director , Sustainability Sponsor Nationality | Malaysian Nationality | Australian Age | 48 GN RC AC BR CC Age | 56 Gender | Female Gender | Male  Date of Appointment | 8 October 2014  Date of Appointment | 16 April 2014 Length of Tenure | 5 Years Q UA L I F I C AT I O N • Bachelor of Arts (Hons) Business Studies, Sheffield Hallam University, United Kingdom • Business and Technology Education (BTEC) Higher National Diploma (HND) Business Studies, Sheffield Hallam University, United Kingdom • Diploma, Chartered Institute of Marketing, United Kingdom • Licensed Investment Adviser by Securities Commission of Malaysia BR CC GN RC Length of Tenure | 5 Years Q UA L I F I C AT I O N • Bachelor of Laws (Hons), University of Technology, Sydney, Australia AREAS OF EXPERTISE • Accounting and Audit, Banking and Finance, Operations, Consumer Marketing, Human Resource D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S AREAS OF EXPERTISE • Banking and Finance Listed Entities • Executive Chairperson of Generation Development Group, Australia D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Public Companies • Nil Public Companies • Nil R E L E VA N T E X P E R I E N C E Listed Entities • Nil R E L E VA N T E X P E R I E N C E Teoh Su Yin was re-designated as Senior Independent Director of CIMB Group Holdings Berhad on 20 October 2018. She has almost 20 years’ experience in equity research and investments. Su Yin began her career with JP Morgan Malaysia as a Junior Analyst in 1994. In 2000, she became Head of Research with sector coverage experience in infrastructure, plantations, power, gaming, real estate and conglomerates. In 2002, she left JP Morgan to join Deutsche Bank Malaysia Berhad, initially as a Senior Analyst and later as Managing Director, Head of Malaysia and ASEAN Equity Research. As individual analyst, Su Yin was ranked Top 3 by Asiamoney in 2008 and 2009. She currently serves on the Board of Albizia ASEAN Opportunities Fund in Singapore, the Board of World Wildlife Fund-Malaysia, as a member of the Alice Smith School Finance Sub-Committee and holds directorships in various other private companies. B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E Robert Neil Coombe is currently the Executive Chairperson of the ASX listed Generation Development Group, a financial services business focused on generational financial solutions. He is also Chairperson of Craveable Brands, the largest Australian owned Quick Service Restaurant business. He was the CEO of Craveable Brands between 2013 and April 2017. Before joining Craveable Brands, Robert was responsible for all of Westpac’s Retail, Business and Agri banking operations throughout Australia. Prior to this role, Robert spent six years as the CEO of BT Financial Group, responsible for all of Westpac’s funds management, financial planning, insurance, private banking, broking, platform and superannuation businesses in Australia. In total, he has over 35 years’ corporate experience in both Australia and Asia. In addition to the above, Robert is a Director of Tibra Capital, Surfing Australia and the Australian Indigenous Education Foundation. He is also a member of the Advisory Board of 5V Capital Investors. B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E BOD AC BRCC GNRC BOD Member 16/16 Member 13/17 Member 7/7 Chairperson 14/16 Member 15/16 Declaration • She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • She has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 AC BRCC GNRC – Chairperson 6/7 Member 13/14 Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 71
74. board of directors profile DATO ’ MOHAMED ROSS MOHD DIN DATO’ LEE KOK KWAN Non-Independent Director Independent Director Nationality | Malaysian Nationality | Malaysian Age | 67 AC BR CC GN RC Age | 54 Gender | Male Gender | Male  Date of Appointment | 19 April 2016  Date of Appointment | 20 July 2015 Length of Tenure | 3 Years Q UA L I F I C AT I O N • Banking Diploma (Part 1), Institute of Bankers, United Kingdom AREAS OF EXPERTISE • Banking and Finance, Operations, International Experience D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Listed Entities • Nil Public Companies • Chairperson/Independent Director of CIMB Islamic Bank Berhad R E L E VA N T E X P E R I E N C E Joined HSBC Bank Malaysia Berhad (HSBC) in early 1972 and served in various capacities ranging from Corporate and Retail Banking and Branch Management. He also served as Head of Treasury Malaysia and Head of Group Audit Malaysia between 1987 and 1996. During this period he also worked for a year in Hong Kong, London and New York in areas of Foreign Exchange and Treasury. As the Managing Director (2003), he was responsible for HSBC’s Islamic onshore business franchise in Malaysia until he retired on 31 December 2007. Upon retirement, Dato’ Mohamed Ross was appointed as an Executive Director and Senior Advisor of HSBC Amanah Takaful Malaysia Sdn Bhd until December 2008. At the same time and until April 2016, he was also an Independent Director of HSBC Amanah Malaysia Berhad, where he sat as Chairperson of the Risk Committee and was a member of the Audit Committee and Nomination Committee. BR CC Length of Tenure | 4 Years Q UA L I F I C AT I O N • Masters in Business Administration, Simon Fraser University, Canada • Bachelor of Business Administration (First Class), Simon Fraser University, Canada AREAS OF EXPERTISE • Banking and Finance D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Listed Entities • Nil Public Companies • Non-Independent Director of CIMB Bank Berhad • Non-Executive Director of Cagamas Holdings Berhad R E L E VA N T E X P E R I E N C E Dato’ Lee Kok Kwan was the Deputy Chief Executive Officer (CEO) of CIMB Group prior to his Board appointments. His areas of responsibilities included Corporate Banking, Transaction Banking and Sales and Trading businesses in interest rates, credit, foreign exchange, bonds, equity, commodities and their derivatives, treasury and funding for the Group, fixed income investments and debt capital markets which he developed since joining CIMB in 1996, and has since grown the businesses to be one of the largest global markets operations in ASEAN. Prior to joining CIMB in 1996, Dato’ Lee had more than seven years of markets and treasury experience in the Canadian banking industry. He was the Treasury Portfolio Manager responsible for interest rates and optionality risk and return for a leading Canadian bank and a member of its Senior Asset-Liability Management Committee. Dato’ Mohamed Ross currently sits on an Advisory Board overseeing a Private Equity Fund (Ekuinas OFM Programme) as an Independent Member. Additionally he also sits as a Trustee on the Board of Lembaga Zakat Selangor and also serves as an Independent Director on the Board of an Asset Management company. Dato’ Lee is also a member of the Board of Trustees of the Capital Markets Development Fund (CMDF) and Adviser to the Securities Commission Malaysia. He was appointed as First Director and Chairperson of the Bond and Sukuk Information Platform Sdn Bhd with effect from 3 November 2017 and 22 November 2017, respectively. He also holds directorships in various other private companies. B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E BOD AC BRCC GNRC BOD Member 16/16 Chairperson 17/17 Member 7/7 Member 16/16 Member 15/16 Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 72 AC BRCC GNRC – Member 7/7 – Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019
75. AHMAD ZULQARNAIN CHE ON AFZAL ABDUL RAHIM Non-Independent Director Independent Director Nationality | Malaysian Nationality | Malaysian Age | 47 BR CC GN RC Age | 42 Gender | Male Gender | Male  Date of Appointment | 3 November 2017  Date of Appointment | 31 January 2019 Length of Tenure | 2 Years Length of Tenure | 1 Year Q UA L I F I C AT I O N Q UA L I F I C AT I O N AREAS OF EXPERTISE AREAS OF EXPERTISE • Bachelor of Arts in Economics from Harvard and Radcliffe College, Harvard University, USA • Banking and Finance, Capital Market, Corporate Leadership, Strategy Development and Implementation D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Bachelor in Mechanical Engineering with Electronics, University of Sussex at Brighton, United Kingdom • Legal, Operations, Information Technology, Human Resource, Strategy Development and Implementation, Innovation and Transformation D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Listed Entities • Nil Public Companies • Non-Independent Director of Malaysia Airlines Berhad • Non-Independent Director of Malaysia Aviation Group Berhad R E L E VA N T E X P E R I E N C E Ahmad Zulqarnain Che On is Deputy Managing Director of Khazanah Nasional Berhad. He joined Khazanah in May 2014 as an Executive Director, Investments and subsequently appointed as Head, Strategic Management Unit of Khazanah. Prior to Khazanah, he was appointed as the first Managing Director/ Chief Executive Officer of Danajamin Nasional Berhad in 2009. He has over 22 years’ experience in both banking and corporates, including tenures with UBS Warburg, Pengurusan Danaharta Berhad, CIMB Group and Symphony Group. Listed Entities • Chief Executive Officer of TimedotCom Berhad • Non-Independent Director of Symphony Communication Public Company Limited Public Companies • Nil R E L E VA N T E X P E R I E N C E Afzal Abdul Rahim is a technology entrepreneur who currently serves as Commander-In-Chief of TIME dotCom Berhad, an ASEAN based telecomunications operator encompassing Fixed Line, Data Centres and Global Submarine Cable Systems. He joined TIME in 2008 after establishing The AIMS Asia Group and Global Transit International in 2006. Afzal founded the non-profit Malaysian Internet Exchange (MyIX) in 2006 and also serves as a Board Member of Endeavor Malaysia, an organisation that is devoted to nurturing high-impact entrepreneurs. He is also a Member of the Civil Aviation Authority Malaysia. He began his career in the automotive sector, initially as a Chassis Development Engineer and thereafter managing clients on the engineering consultancy side of the business at Group Lotus PLC. Afzal is also a Licensed Commercial Pilot. B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E BOD Member 15/16 B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E AC BRCC GNRC BOD – Member 6/7 Member 15/16 Member 15/16 Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 AC – BRCC GNRC – Member 7/9 Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 73
76. group company board of directors profile DIDI SYAFRUDDIN YAHYA Independent Director Nationality | Indonesian Age | 52 GN RC DATIN ROSSAYA MOHD NASHIR Group Company Secretary Nationality | Malaysian Age | 51 Gender | Male Gender | Female  Date of Appointment | 7 May 2019  Date of Appointment | 2002 Length of Tenure | Less than 1 Year Length of Tenure | 18 Years Q UA L I F I C AT I O N Q UA L I F I C AT I O N • Bachelor of Laws (majoring in Business Law), Coventry University, United Kingdom • Licensed Secretary, Companies Commission of Malaysia • Affiliate, Malaysian Institute of Chartered Secretaries and Administrators AREAS OF EXPERTISE AREAS OF EXPERTISE • Company Law, Corporate Secretarial Practice, Corporate Governance and Conflicts Management • Fellow Chartered Accountant, Institute of Chartered Accountants in England and Wales, United Kingdom • Master of Arts, University of Cambridge, United Kingdom • Bachelor of Arts, University of Cambridge, United Kingdom • Capital Market, International Experience D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S Listed Entities • Nil Public Companies • Nil Listed Entities • Nil Public Companies • Independent Director of CIMB Investment Bank Berhad • Commissioner of PT Bank CIMB Niaga Tbk R E L E VA N T E X P E R I E N C E Didi Syafruddin previously worked for J.P. Morgan for more than 20 years based in Indonesia and subsequently Malaysia where he was the Managing Director and Head of Investment Banking. At J.P. Morgan, Didi Syafruddin advised clients on mergers and acquisitions, equity and debt capital markets transactions and had been involved in a number of landmark deals in both Indonesia and Malaysia. He is currently a Member of Investment Panel of Urusharta Jamaah Sdn Bhd. R E L E VA N T E X P E R I E N C E Datin Rossaya Mohd Nashir has worked at the bank since joining the Corporate Legal Services Unit in 2002. She was instrumental in setting up the Company Secretarial Department in 2004 and was appointed as Group Company Secretary in 2006. In her role, she is responsible for providing counsel and advice on Board duties and responsibilities, to ensure that CIMB complies with relevant laws and regulatory requirements. She also plays a liaison role between the Board and its key stakeholders both in Malaysia and in the Group’s regional operations, ensuring that a corporate governance framework is deployed in a manner that supports the Group’s vision and aspirations. She has extensive industry knowledge, with over 25 years of experience in corporate secretarial practice. Previously, she was with Permodalan Nasional Berhad where she assumed the position of Joint Company Secretary for several of its subsidiaries. She began her career with the Time Engineering Group. B OA R D A N D B OA R D C O M M I T T E E AT T E N DA N C E BOD Member 12/12 AC – BRCC GNRC – Member 6/7 Declaration • He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies in 2019 74 Datin Rossaya serves as a member of the Companies Commission of Malaysia’s Corporate Practice Consultative Forum and is a Director of several subsidiaries in the CIMB group. She is a CIMB Sustainability Champion and has initiated several projects to encourage sustainability in the workplace for #teamcimb. She actively advocates greater participation of women in the boardroom and has been involved in various networking initiatives to promote this agenda. Declaration • She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company • She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies in 2018
77. corporate 100 % OTHER SUBSIDIARIES iCIMB (MSC) SDN. BHD. 81.23% TOUCH ‘N GO SDN. BHD. 51% TNG DIGITAL SDN. BHD. 100% CIMB GROUP SDN. BHD. 99.99% CIMB BANK BHD. 100% CIMB INVESTMENT BANK BHD. 100% OTHER SUBSIDIARIES CIMB ISLAMIC BANK BHD. 100% CIMB BANK (L) LTD. 100% iCIMB (MALAYSIA) SDN. BHD. 94.83% CIMB THAI BANK PUBLIC COMPANY LTD. 100% 100% CIMB SI SDN. BHD. 100% CIMB SI 1 SDN. BHD. 18.77% CIMB BANK (CAMBODIA) PLC 100% TOUCH ‘N GO SDN. BHD. CIMB BANK (VIETNAM) LIMITED OTHER SUBSIDIARIES 60% CIMB BANCOM CAPITAL CORPORATION 92.5% PT BANK CIMB NIAGA TBK OTHER SUBSIDIARIES 50% CGS-CIMB SECURITIES INTERNATIONAL PTE. LTD. OTHER SUBSIDIARIES 75
78. board of CIMB BANK BERHAD CHAIRPERSON MEMBERS Dato ’ Zainal Abidin Putih Non-Independent Director Tengku Dato’ Sri Zafrul Tengku Abdul Aziz Chief Executive Officer/ Executive Director Datuk Mohd Nasir Ahmad Independent Director Rosnah Dato’ Kamarulzaman Independent Director Datin Grace Yeoh Cheng Geok Independent Director Venkatachalam Krishnakumar Independent Director Sukanta Kumar Dutt Independent Director (Appointed on 30 October 2019) Dato’ Lee Kok Kwan Non-Independent Director Nadzirah Abd Rashid Independent Director (Appointed on 30 October 2019) Serena Tan Mei Shwen Non-Independent Director Chu Hong Keong Independent Director (Appointed on 1 May 2019) Dato’ Sri Amrin Awaluddin Independent Director (Resigned on 1 May 2019) S E C R E TA RY Datin Rossaya Mohd Nashir CIMB INVESTMENT BANK BERHAD CHAIRPERSON MEMBERS Dato’ Robert Cheim Dau Meng Non-Independent Director Jefferi Mahmud Hashim Chief Executive Officer/ Executive Director Nadzirah Abd Rashid Independent Director Didi Syafruddin Yahya Independent Director Manu Bhaskaran Independent Director S E C R E TA RY Datin Rossaya Mohd Nashir CIMB ISLAMIC BANK BERHAD CHAIRPERSON MEMBERS Dato’ Mohamed Ross Mohd Din Independent Director Ahmad Shahriman Mohd Shariff Chief Executive Officer/ Executive Director (Appointed on 1 October 2019) Ahmed Baqar Rehman Independent Director Rosnah Dato’ Kamarul Zaman Independent Director Jalalullail Othman Independent Director Ho Yuet Mee Independent Director Rafe Haneef Chief Executive Officer/ Executive Director (Resigned on 1 October 2019) S E C R E TA RY Datin Rossaya Mohd Nashir PT BANK CIMB NIAGA TBK MEMBERS PRESIDENT COMMISSIONER Tengku Dato’ Sri Zafrul Tengku Abdul Aziz President Commissioner Glenn Muhammad Surya Yusuf Vice President Commissioner (Resigned on 1 September 2019) Zulkifli M. Ali Independent Commissioner Jeffrey Kairupan Senior Independent Commissioner David Richard Thomas Non-Independent Commissioner Pri Notowidigdo Independent Commissioner Didi Syafruddin Yahya Non-Independent Commissioner (Appointed 15 April 2019) Sri Widowati Independent Commissioner (Appointed 15 April 2019) CORPORATE SECRETARY Fransiska Oei 76
79. CIMB THAI BANK PUBLIC COMPANY LIMITED CHAIRPERSON MEMBERS Dato ’ Robert Cheim Dau Meng Non-Independent Director Adisorn Sermchaiwong President and Chief Executive Officer/Executive Director (Appointed on 4 December 2019) Watanan Petersik Independent Director Serena Tan Mei Shwen Non-Independent Director CIMB Cambodia Chanmanu Sumawong Option 1 - Normal Version Independent Director Dr. Rom Hiranpruk Independent Director Title Job : Omar Siddiq Amin Noer Rashid Non-Independent Director Shahnaz Farouque Jammal Ahmad Non-Independent Director Niti Jungnitnirundr Independent Director (Appointed on 18 April 2019) Natasak Rodjanapiches Independent Director (Appointed on 18 April 2019) CIMB Thai, Thai logo refinement Client : CIMB Investment Bank Berhad Date : 12 February 2009 Designer : Urasa Navanugraha Oranuch Apisaksirikul Independent Director (Appointed 26 June 2019) S E C R E TA RY Patima Jumpasut Positive - Colour & Greyscale C0 M100 Y85 K60 C I M B B A N K ( C A M BC0OM100 D IY100 A )K0 P L C K100 CHAIRPERSON M E M BK50 ERS Datuk Mohd Nasir Ahmad Independent Director (Appointed on 16 December 2019) Bun Yin Chief Executive Officer/ Executive Director C0 M100 Y85 K60 Dr. Mey Kalyan K100 Independent Director C0 M100 Y100 K0 K50 Aisyah Lam Abdullah Independent Director Omar Siddiq Amin Noer Rashid Non-Independent Director (Appointed on 16 December 2019) Yong Jiunn Run Non-Independent Director (Resigned on 16 December Reversed - Colour & Greyscale 2019) Ahmad Shazli Kamarulzaman Non-Independent Director (Appointed on 16 December 2019) Dato’ Shahrul Nazri Abdul Rahim Non-Independent Director (Resigned on 1 July 2019) Renzo Christopher Viegas Non-Independent Director (Resigned on 31 July 2019) Dato’ Wira Zainal Abidin Mahamad Zain Independent Director (Retired on 16 December 2019) J O I N T S E C R E TA R I E S Ly Sophea Datin Rossaya Mohd Nashir CIMB BANK (VIETNAM) LIMITED CHAIRPERSON MEMBERS Dato’ Wira Zainal Abidin Mahamad Zain Chairperson/ Independent Director Thomson Fam Siew Kat Chief Executive Officer/ Executive Director Le Le Thuy Independent Director Aisyah Lam Abdullah Independent Director Effendy Shahul Hamid Non-Independent Director (Appointed on 6 December 2019) Renzo Christopher Viegas Non-Independent Director (Resigned 31 July 2019) J O I N T S E C R E TA R I E S Tran Hai Long Datin Rossaya Mohd Nashir 77
80. group shariah From left to right • ASSOCIATE PROFESSOR DR AISHATH MUNEEZA • DR YOUSEF ABDULLAH AL SHUBAILY • AHMED BAQAR REHMAN • DR SHAFAAI MUSA • DR NEDHAM YAQOOBI • DR AHMAD SUFIAN CHE ABDULLAH 78
81. group shariah DR SHAFAAI MUSA Nationality | Malaysian Age | 53 DR NEDHAM YAQOOBI Nationality | Bahraini Age | 61 Gender | Male Gender | Male  Date of Appointment | 9 January 2006  Date of Appointment | 14 June 2006 Length of Tenure | 13 Years Length of Tenure | 13 Years Q UA L I F I CAT I O N Q UA L I F I CAT I O N • Master’s degree in Comparative Laws, IIUM • M.Sc. in Finance, McGill University, Montreal, Canada • Degree in Shariah, Al-Azhar University, Egypt • Bachelor of Arts degree in Economics and Comparative Religion from McGill University, Montreal, Canada • PhD, Glasgow Caledonian University, UK D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Chairman of the Shariah Committee at Sun Life Malaysia Takaful Berhad R E L E VA N T E X P E R I E N C E • Former Associate Professor at the Ahmad Ibrahim Kulliyyah of Laws at the International Islamic University Malaysia (IIUM) • Former Chief Executive Officer of the Johor Institute of Integrity, Leadership and Training • Former Executive Director of IIUM’s Centre for Continuing Education • Former Chief Executive Officer of the International Islamic College cum Chief Executive Officer, International Islamic University Malaysia Higher Education Sdn Bhd • PhD in Islamic Law, University of Wales, UK D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Member of Shariah Board of AAOIFI • Member of Shariah Board of IIFM (Islamic International Finance Market) • Over 40 Shariah Advisory Boards including Standard Chartered, BNP Paribas, Abu Dhabi Islamic Bank, S&P, Dow Jones, and Lloyds Bank R E L E VA N T E X P E R I E N C E • Author of Several Articles and Publications on Islamic Finance and other Sciences, in both English and Arabic • Educated in classical Shariah in his native Bahrain and in Mecca under the guidance of eminent scholars such as Sheikh Abdulla Al-Farisi, Sheikh Yusuf Al-Siddiqi, Sheikh Muhammed Saleh al-Abbasi, Sheikh Muhamed Yasin Al-Fadani of Mecca, Sheikh Habib-Ur-Rahman A. Zaini of India, Sheikh Abdulla bin Al-Siddiq Al-Ghumar of Morocco 79
82. group shariah committee profile AHMED BAQAR REHMAN Nationality | Pakistan Age | 61 DR YOUSEF ABDULLAH AL SHUBAILY Nationality | Saudi Arabian Age | 49 Gender | Male Gender | Male  Date of Appointment | 1 June 2019  Date of Appointment | 28 October 2008 Length of Tenure | 2 Years Length of Tenure | 11 Years Q UA L I F I CAT I O N Q UA L I F I CAT I O N D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Master’s degree from the Department of Comparative Jurisprudence at Imam Muhammad ibn Saud Islamic University • Bachelor of Arts-Economics – University of Michigan, USA • Member, Independent Board of Director, CIMB Islamic Bank Berhad • Chairman, Board Risk Committee, CIMB Group • Member, Independent Board of Director, Al Baraka Bank (Pakistan) Limited • Chairman, Board Risk Committee, Al Baraka Bank (Pakistan) Limited • Managing Partner, Israa Capital R E L E VA N T E X P E R I E N C E • PhD in Islamic Jurisprudence from Imam Muhammad ibn Saud Islamic University • Bachelor’s degree from Faculty of Shariah and Fundamentals of Islam, Department of Comparative Jurisprudence at Imam Muhammad ibn Saud Islamic University D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Member of Shariah Board of AAOIFI • Member of Shariah Board of IIFM (Islamic International Finance Market) • Mr. Ahmed Rehman has over 30 years of experience with multinational banks in senior management roles, such as Chief Executive as well as direct responsibility for wholesale bank and risk. He was also involved in the Corporate Banking integration of Standard Chartered Bank Pakistan with Grindlays Bank Pakistan • Member of Shariah Board of Albilad Bank in Saudi Arabia • His experience covers different geographies in Asia, Middle East and Africa, with American Express Bank, Standard Chartered Bank and Al Rajhi Bank • Serves as a Cooperating Professor for the American Open University • Former CEO of Al Rajhi Bank Malaysia R E L E VA N T E X P E R I E N C E • Currently lectures in the Department of Comparative Jurisprudence, High Institute of Judiciary at Saudi Arabia’s Imam Muhammad ibn Saud Islamic University in Riyadh • Performs advisory functions within numerous religious and charitable organisations both within and outside Saudi Arabia • Written many books, academic papers and articles on Islamic jurisprudence and commercial law • Participated in numerous seminars and conventions in related areas • Expert of Islamic Fiqh Academy 80
83. ASSOCIATE PROFESSOR DR AISHATH MUNEEZA Nationality | Maldivian Age | 35 DR AHMAD SUFIAN CHE ABDULLAH Nationality | Malaysian Age | 41 Gender | Female Gender | Male  Date of Appointment | 13 April 2018  Date of Appointment | 1 November 2019 Length of Tenure | 2 Years Length of Tenure | 1 Year Q UA L I F I CAT I O N • PhD in Law – International Islamic University Malaysia • LLM (Banking) – International Islamic University Malaysia • Bachelor of Laws (Hons) – International Islamic University Malaysia D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Chairman, Shariah Advisory Council of Capital Market Development Authority, Maldives R E L E VA N T E X P E R I E N C E • Former Deputy Minister – Ministry of Finance and Treasury, Republic of Maldives • Former Deputy Minister – Ministry of Islamic Affairs, Republic of Maldives • Former Chairman, Board of Directors, Maldives Center for Islamic Finance Ltd • Former Chairman, Board of Directors, Maldives Hajj Corporation Ltd (Tabung Haji of Maldives) Q UA L I F I CAT I O N • PhD in Islamic Economy and Banking – University of Yarmouk, Jordan • Master’s Degree in Shariah (Islamic Finance) – University of Malaya, Malaysia • Bachelor Degree in Shariah and Management – University of Malaya, Malaysia D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Member, Shariah Advisory Board, Syarikat Takaful Malaysia Keluarga Berhad • Member, Fatwa Committee, Jabatan Mufti Negeri Perlis • Member, Islamic Legal Consultative Committee, Federal Territories • Member, Waqaf Committee, Majlis Agama Islam dan Adat Istiadat Negeri Kelantan (MAIK) • Member, Shariah Advisor Committee, Sabnuha Jewellery PLT R E L E VA N T E X P E R I E N C E • Currently a Senior Lecturer at the Department of Shariah and Management, Academy of Islamic Studies of University Malaya. • Previously Shariah Committee, Kenanga Investment Bank Berhad • Previously Muamalat Expert Panel of Jabatan Kemajuan Islam Malaysia (JAKIM) • He has produced numerous publications such as book and research papers in Islamic legal theories (usul fiqh), Islamic commercial laws, Islamic banking and finance, Takaful and Shariah Fintech • He is the founder and administrator of “muamalat.my”, a social media platform that strives to become a medium of education in enhancing public awareness with regards to Islamic Finance and Takaful since 2013 81
84. group Seated front row from left to right 82 • TIGOR M. SIAHA AN • DATO ’ H A M I DA H N A Z I A D I N • T E N G K U DATO ’ S R I Z A F R U L T E N G K U A B D U L A Z I Z
85. Back row from left to right • • • • • • • • • • • R AFE HANEEF DAV I D R I C H A R D T H O M A S GURDIP SINGH SIDHU E F F E N DY S H A H U L H A M I D S A M I R G U P TA OMAR SIDDIQ AMIN NOER RASHID ADISORN SERMCHAIWONG V I C TO R L E E M E N G T E C K K WA N K E E N Y E W SHAHNA Z JAMMAL AHMAD SHAHRIMAN MOHD SHARIFF 83
86. group management VICTOR LEE MENG TECK TIGOR M . SIAHAAN Country Head, Indonesia President Director & Chief Executive Officer, PT Bank CIMB Niaga Tbk Indonesian 48 Male Q UA L I F I C AT I O N • Double major in Finance and Accounting, University of Virginia, Charlottesville, USA D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Chairman of Indonesia Malaysia Bilateral Committee of Indonesian Chamber of Commerce and Industry (KADIN) • Vice Chairman of Perbanas (Indonesian Banks Association) • Member of the Board of Trustees of Jakarta International School (JIS) • Mentor in Endeavor Indonesia • Executive Committee of Young Presidents Organization (YPO) Indonesia • The Employers’ Association of Indonesia (APINDO), Chairperson of Banking, Financial Services & Taxation • Vice Chairman of Indonesia Banker Institute R E L E VA N T E X P E R I E N C E • Chief Country Officer of Citi Indonesia from 2011-2015. First Indonesian to be appointed to the post • Held several key positions in Citi Indonesia including Country Head for Institutional Clients Group, Head of Corporate & Investment Banking and Country Risk Manager • Served as Vice President in Institutional Remedial Management Group in Citi Head Office in New York from 2000 to 2003 84 Country Head, Singapore Chief Executive Officer, CIMB Bank Singapore Chief Executive Officer, Group Commercial Banking Singaporean 49 Male Q UA L I F I C AT I O N • Bachelor of Applied Science (Materials Engineering), Nanyang Technological University, Singapore • Alumni of ASIAN Financial Leaders Programme (AFLP), mandated by Monetary Authority of Singapore D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S ADISORN SERMCHAIWONG Country Head, Thailand President & Chief Executive Officer, CIMB Thai Bank PCL Thai 53 Q UA L I F I C AT I O N • Master of Business Administration, Sasin Graduate Institute of Business Administration of Chulalongkorn University • Bachelor of Engineering, Chulalongkorn University D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S •Nil • Chairman, CT COLL Co., Ltd. R E L E VA N T E X P E R I E N C E R E L E VA N T E X P E R I E N C E • Responsible for the Group’s Commercial Banking business, comprising Business Banking and SME Banking businesses, across Malaysia, Indonesia, Singapore, Thailand, Cambodia • Responsible for the Group’s Singapore business, covering Consumer, Commercial, Corporate banking segments, including its Investment Banking, Private Banking and Treasury units • Over 20 years of experience in Microfinance, Retail banking, Commercial Banking, Corporate Banking, Channels/ Distribution Management, Credit management, ALM, with markets coverage in ASEAN, North Asia, Africa and Middle East • At Fullerton Financial Holdings, he was responsible for managing its investments in banks and financial services firms, driving strategy and implementations, leading several digital initiatives across Asia and delivering strong operational risk governance and performance excellence. He held various board directorships within the Fullerton Group • In the Banking circuit, he was Managing Director at United Overseas Bank (UOB) and led the SME banking segment across ASEAN. At Standard Chartered, he was a member of the Global SME Banking management committee, and worked and lived in Singapore, Taiwan and China, managing these business. He also led several mergers and rationalisations for the bank. Earlier in Citibank, he was the Director for CitiBusiness • Awarded “Top 50 Most Promising Young Leaders’’ award in 2008 by The Asian Banker for bankers aged below 40 in Asia Pacific and Middle East region Male • 25 years of banking and finance career in the areas of asset/investment management, wealth management, channels and retail banking • He joined CIMB Thai in 2012 as Senior Executive Vice President, Head, Consumer Banking and was subsequently appointed President and CEO in Oct. 2019. During his tenure as Head of Consumer Banking, he has successfully transformed a loss making franchise to become the largest revenue contributor to CIMB Thai. He has also set up the pioneering Agile team within Group tasked to build a digital challenger bank at CIMB Thai • In 2010, he joined UOB Bank PCL as Executive Director, Country Head of Channels • In 2008, he joined Siam Commercial Bank PCL as Executive Vice President, Saving & Investment Products • He spent about 5 years as President at SCB Asset Management Co., Ltd.
87. AHMAD SHAHRIMAN MOHD SHARIFF SHAHNAZ JAMMAL SAMIR GUPTA Chief Executive Officer , Group Islamic Banking Chief Executive Officer/Executive Director, CIMB Islamic Bank Berhad Chief Executive Officer, Group Wholesale Banking Chief Executive Officer, Group Consumer Banking Malaysian 43 Male Malaysian 45 Male Q UA L I F I C AT I O N • Bachelor of Arts in Accounting and Finance, Lancaster University, United Kingdom • Malaysian Financial Markets Certificate, Persatuan Pasaran Kewangan Malaysia dan Institut Bank-Bank Malaysia, Malaysia • Chartered Profesional in Islamic Finance, Chartered Institute of Islamic Finance Professionals, Malaysia Q UA L I F I C AT I O N D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Vice President and Council Member, Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) • Member, Standing Committee on Islamic Financial Reporting, Malaysian Accounting Standards Board (MASB) • Director, CIMB Thai Bank Public Company Limited • Director, CGS-CIMB Securities International Pte Ltd R E L E VA N T E X P E R I E N C E • Over two decades of experience in the corporate sector, of which 16 years were in Islamic Banking and Finance-related roles and has been a key contributor in the development of the Islamic banking and finance industry, with primary focus on capital markets and treasury solutions • Headed Wholesale Banking at HSBC Amanah Malaysia Berhad as Director, and prior to that he served as Head of Islamic Banking at Citibank Berhad. In these roles, he was tasked with building the Islamic Wholesale Banking and Treasury businesses globally, in which he gained strong leadership, technical, legal and risk management expertise from his stint in these cross-border institutions • Played an active role in the development of Malaysia’s Islamic banking industry, with a longstanding role in the Treasury committee of the Association of Islamic Banks in Malaysia (AIBIM). In this capacity he was involved in key industry initiatives such as developing, amongst others, a commodity exchange for Islamic finance purposes, Islamic structured products, documentation standards for Islamic derivatives as well as Islamic credit support mechanism • Prior to joining the banking industry via Citibank’s Management Associate programme, he was in the oil & gas industry for four years while serving his scholarship bond with a Malaysian conglomerate • Bachelor (Double First Class) and Master of Arts in Economics, University of Cambridge, United Kingdom • MPhil in Economics, University of Oxford, United Kingdom D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S R E L E VA N T E X P E R I E N C E • Group Wholesale Banking (GWB) division consists of Group Investment Banking, Senior Bankers’ Group, Group Private Banking, Group Corporate Banking, Financial Institution Group, Group Treasury & Markets, Group Analytics & Strategy and International Branches • Was recently the Group Chief Financial Officer of CIMB Group • Prior to this, was in various capacities within CIMB Group, including Deputy Group Chief Financial Officer and Head of Capital & Balance Sheet Management, as well as in Group Risk Management, Corporate Client Solutions and PT Bank CIMB Niaga Tbk • Has over 20 years of banking experience, covering M&A Advisory, Risk Advisory, Trading and Risk Management • Has worked with Goldman Sachs in London, Bankers Trust and Dresdner Kleinwort Wasserstein in London, as well as ABN AMRO Bank in Kuala Lumpur Singaporean 57 Male Q UA L I F I C AT I O N • Bachelor of Technology in Mechanical Engineering, Indian Institute of Technology, India • Master of Management Studies, University of Bombay, India D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Nil R E L E VA N T E X P E R I E N C E • Over 30 years’ experience in the banking industry including retail, wealth management, consumer finance, cards, risk, operations and audit • Senior Manager with track record of building consumer banking franchises in Asia, Africa and Middle East • Started his working career with Citibank, India and moved to Singapore in 1990 • Managed various roles in Citibank and Barclays and PT Bank CIMB Niaga Tbk based out of Singapore, Thailand, Dubai, Turkey and Indonesia • Joined CIMB Group as Consumer Banking Director of PT Bank CIMB Niaga Tbk in 2010 85
88. group management profile RAFE HANEEF EFFENDY SHAHUL HAMID GURDIP SINGH SIDHU Chief Executive Officer , Group Transaction Banking Chief Executive Officer, Group Ventures & Partnerships Group Chief Strategy & Design Officer Malaysian 49 Male Q UA L I F I C AT I O N • Master of Laws (LL.M), Harvard Law School • Bachelor of Laws (LL.B), International Islamic University Malaysia • Qualified for the New York State Bar in 1997 • Admitted to the Malaysian Bar in 1995 D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Nil R E L E VA N T E X P E R I E N C E • Oversees transaction banking business which consist of four main product pillars namely Trade Finance, Cash Management, Securities Services and Financial Institution serving the Group’s Non Retail customers across CIMB franchise in ASEAN. Transaction Banking drives annuity business and relationship stickiness; thus pivotal to the growth of CIMB Group • Previously, CEO of CIMB Islamic Bank Berhad in charge of the Group’s Islamic banking and finance franchise. CIMB Islamic operates as a parallel franchise to the Group’s conventional operations and covers Islamic wholesale banking, Islamic consumer banking, Islamic commercial banking and Islamic asset management and investments • Instrumental in the inclusion of CIMB Islamic in the Value-based Intermediation (VBI) Community of Practitioners, working to develop VBI together with the central bank to contextualise and drive sustainability with Islamic finance institutions in Malaysia • Instrumental in CIMB Group being a member of RFI as well as a founding member to the UNEP FI Principles for Responsible Banking • 20 years of experience covering a range of businesses and functional roles gained from three global banks, an international asset management company and a legal firm, at various financial centres including London, Dubai and Kuala Lumpur • CEO, Malaysia, and Managing Director of Global Markets, ASP, HSBC Amanah in 2010 • Regional Head for Islamic banking, Asia Pacific, Citigroup Asia in 2006 • Global Head of Islamic Finance business at ABN AMRO Dubai in 2004 covering both consumer and corporate businesses • Joined HSBC Investment Bank plc, London in 1999 and thereafter HSBC Financial Services Middle East, Dubai where he set up the global sukuk business in 2001. 86 Malaysian 46 Male Q UA L I F I C AT I O N • Honours in Electronic Engineering with Optoelectronics, University College London, United Kingdom • Digital Business Leadership Programme, Columbia Business School, Columbia University • Alumni of the CIMB INSEAD Leadership Programme D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Director, Touch ’n Go Sdn Bhd • Director, TNG Digital Sdn Bhd • Director, Financial Park (Labuan) Sdn Bhd • Director, Principal Asset Management Berhad, PT Principal Asset Management, Principal Asset Management Co Limited and Principal Islamic Asset Management Sdn Bhd R E L E VA N T E X P E R I E N C E • Responsible for the development of the Group’s new and disruptive revenue and value creation streams through a focus on creating and cultivating platform partnerships at scale, venturing through selective strategic investments in platform based businesses, steering CIMB’s approach and practices in terms of financial technology trends, and managing the Group’s operations in Vietnam and the Philippines. Responsible for leading efforts and pursuing strategies in the virtual banking space for the Group • Also responsible for the Group’s asset management and investments business across both public and private markets, including the Group’s regional asset management business, its private equity fund management business and the Group’s equity investments portfolio in companies such as Principal Asset Management and Touch ’n Go • Most recently, was CEO of Group Commercial Banking, managing the Group’s regional banking businesses for the small and medium enterprise and mid-sized corporate segment, with a key lean on creating differentiated propositions and executing long term growth strategies • Prior to that, was Group Chief Marketing and Communications Officer, managing the Group’s entire marketing and communications initiatives and lead franchise-wide efforts to ensure a consistent and differentiated CIMB brand for all of the Group’s Businesses across the region • Before that, served as a Director in the Group’s Investment Banking Division, primarily focusing on corporate advisory and origination • Prior to joining the Group, career stints in several international companies in a corporate development capacity, mostly involved in private equity, merger and acquisition activities across Asia Pacific and general business expansion initiatives. • Regional business experience having worked and lived in Malaysia, Hong Kong and Singapore. Malaysian 46 Male Q UA L I F I C AT I O N • Honours in Accounting and Finance, the London School of Economics and Political Science, University of London, United Kingdom • Chartered Financial Analyst (CFA) • Alumni of the CIMB-INSEAD Leadership Programme D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Director, Proton Commerce Berhad • Director, CIMB (Private) Limited, Sri Lanka R E L E VA N T E X P E R I E N C E • Oversees the following functions; Corporate Strategy & Planning, Group Corporate Finance, Strategic Programme Management, Group Sustainability, Group Customer Experience, Transforming Customer Journeys, and Group Brand Management & Sponsorships • Works alongside the Group CEO and Senior Management in setting the strategic direction of the Group, supporting the execution of transformational and growth initiatives and a member of the T18 Oversight Committee and Forward23 Transformation Council. Gurdip also is a member of the Group Executive Committee (GEXCO) as well as the Group Management Committee (GMC) • Instrumental in CIMB Group being a founding member to the UNEP FI Principles for Responsible Banking as well as responsible for the Strategic oversight on Sustainability and Sustainable Finance • Prior to the expanded role that covers areas of Customer, Sustainability and Brand, Gurdip was the Chief Strategy Officer where his focus was to drive the organic and in- organic strategy and the execution of key initiatives. This included the entry into new markets, key M&A and partnerships as well as the execution of the T18 Program • Prior to joining CIMB, Gurdip spent a decade in an international management consulting firm advising banks, telecommunications companies and Governments across ASEAN, India, South Korea and Spain
89. KHAIRULANWAR RIFAIE OMAR SIDDIQ AMIN NOER RASHID DATO ’ HAMIDAH NAZIADIN Group Chief Financial Officer Group Chief Operating Officer Group Chief People Officer Chief Executive Officer, CIMB Foundation Malaysian 39 Male Q UA L I F I C AT I O N • First Class Honours degree in Accounting and Finance from University of Warwick • MSc in Finance from Imperial College • Member of the Institute of Chartered Accountants in England and Wales (ICAEW) D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Director of SIBB Berhad • Director of Perdana Nominees Sdn Bhd • Director of S.B Properties Sdn Bhd • Director of S.B. Venture Capital Corporation Sdn Bhd • Director of Premier Fidelity Sdn Bhd • Director of SBB Berhad • Director of Commerce Returns Berhad • Director of CIMB Berhad • Director of CIMB Southeast Asia Research Sdn Bhd (CARI) • Director of CIMB Real Estate Sdn Bhd • Director of CIMB Group Sdn Bhd • Director of CIMB Bank (L) Limited • Director of Southeast Asia Special Asset Vehice Ltd (SEASAV) • Director of CIMB Holidngs Sdn Bhd R E L E VA N T E X P E R I E N C E • Prior to his current role, Khairul held the position of CFO, Malaysia and Regional Head, Financial Control with responsibility for tax, regulatory reporting, financial accounting, management reporting, business finance advisory, product control and financial planning • Khairul started his career with KPMG, London focusing on servicing Investment Banking clients • In 2006, he joined Goldman Sachs, London as an equity analyst covering the European Insurance Sector. He then joined UBS, Malaysia in 2009 to cover the Malaysian Banking Sector and later on also covered the Singapore Banking sector • Prior to joining CIMB Group, Khairul was working at RHB Group, Malaysia as the Head of Finance of RHB Islamic and Head of Investor Relations Malaysian 46 Male Q UA L I F I C AT I O N • BSc (Hons) Economics, London School of Economics • Fellow, Institute of Chartered Accountants in England and Wales • CFA Charterholder D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Director of CIMB Thai Bank Public Company Limited • Director of CIMB Bank (Cambodia) PLC R E L E VA N T E X P E R I E N C E • Appointed as the Acting President/CEO, CIMB Thai Bank Public Company Limited • Previously was Head of Group Wholesale Banking at RHB Group with oversight over the RHB Group’s Wholesale business (comprising investment banking, treasury, corporate banking and asset management) and its International business segment excluding Singapore (comprising Cambodia, Laos, Thailand and Brunei) • Former Executive Director and Group Chief Financial Officer at Malaysia Airlines Berhad with responsibility primarily for financial management spanning transaction accounting, management reporting, budgeting, treasury, financial forecasting and procurement as well as overseeing aircraft fleet planning and management • Former Executive Director in the Investments Division at Khazanah Nasional Berhad and member of the senior management team with a focus on the aviation and airports sectors • Former Managing Director in the Investment Banking Division at CIMB Investment Bank Berhad • Former Executive Director in the Corporate Finance Practice of PricewaterhouseCoopers (PwC) Malaysian 56 Female Q UA L I F I C AT I O N • Bachelor of Laws, University of Wolverhampton, United Kingdom D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Director, Maxis Berhad R E L E VA N T E X P E R I E N C E • Provides overall strategic leadership for HR of CIMB across ASEAN • Transformed HR from an administrative function into a key business enabler, contributing to the Group’s rapid growth into a leading ASEAN financial institution • Strategised the resource integration, ensuring a successful consolidation in various mergers and acquisitions over the years, within Malaysia, and across ASEAN and APAC regions • Implemented strategic HR programmes, which have earned peer and industry recognition through numerous awards and elevated CIMB’s differentiation in the market • Strengthened workplace culture through numerous employee engagement initiatives with emphasis on the three critical behaviours of ‘A Better CIMB’ and compliance to code of ethics and conduct • Initiated the development of workplace wellness policies and programmes to build and sustain a productive and inspiring environment • Leads people strategies to attract, develop and retain talent, cultivate an agile workforce to prepare for the future of work, and improve the end-to-end employee experience via technology innovation • Spearheads CSR in community development, sports and education initiatives with diversity and inclusion as the guiding principles 87
90. group management profile DAVID RICHARD THOMAS KWAN KEEN YEW AMRAN MOHAMAD Group Chief Risk Officer Group Chief Legal & Compliance Officer Group Chief Internal Auditor American 60 Male Malaysian 46 Male Q UA L I F I C AT I O N Q UA L I F I C AT I O N • Bachelor’s Degree, Whitman College, Washington USA • Bachelor of Laws (Hons), University of Sheffield, United Kingdom D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Commissioner, PT Bank CIMB Niaga Tbk • Nil R E L E VA N T E X P E R I E N C E R E L E VA N T E X P E R I E N C E • Oversees the risk management function of CIMB Group, including Market, NonFinancial Risk, Shariah, Asset Liability Management, Credit Risk Infrastructure and Risk Analytics • Responsible for ensuring the consistent implementation of the Group’s risk management policies and frameworks, including operationalising the Risk Appetite Statement. The Risk Division of CIMB Group identifies, assesses, measures, controls and reports the material risks that may impact the Group’s business operations, profitability, capital and reputation • Previously worked for Bank of America in Los Angeles, California as a sector Banker, covering the Fortune 500 Aerospace & Defense sector • Served as the Chief Risk Officer for Asia Pacific for the Royal Bank of Scotland (RBS). Prior to RBS, he served as the Chief Credit Officer for Asia Pacific for Bank of America • Held various senior level positions based in Singapore, Hong Kong, Thailand and Taiwan throughout his 26-year tenure in Asia 88 • Oversees the Group Legal and Compliance function which is responsible for the management of regulatory, legal and compliance risks across CIMB Group • Held various roles in a foreign bank which included Regional Head of Compliance for Malaysia, Australia, Brunei, and Vietnam, Head of Wholesale Banking Compliance for Hong Kong, and Head of Legal & Compliance for Malaysia • Prior to joining the banking industry, Keen Yew was in private practice at a regional law firm and was advising clients on projects, as well as banking and finance Malaysian 44 Male Q UA L I F I C AT I O N • Bachelor of Science (Hons) in Accountancy from the University of East Anglia, Norwich, United Kingdom • Fellow member of the Association of Chartered Certified Accountants (ACCA) • Member of the Malaysian Institute of Accountants (MIA) • Member of Institute of Internal Auditors Malaysia (IIA) D I R E C T O R S H I P/ R E L E VA N T A P P O I N T M E N T S • Nil R E L E VA N T E X P E R I E N C E • Ensures that the Group Corporate Assurance Division supports the CIMB Group Audit Committee, CIMB Banking Group Audit Committee and other relevant Audit Committees of Group’s subsidiaries in discharging their responsibilities, as well as managing their respective governance, risk and control functions. He oversees the Internal Audit functions across the entire Group • Amran has over 20 years of audit experience in the areas of capital market, corporate and retail banking gained working in Malaysia and the United Kindgom. Amran’s last held position before joining CIMB was Senior Vice President, Internal Audit with Royal Bank of Scotland in London. He had also previously worked with PwC, KPMG, UniCredit Bank and Barclays Capital
91. human People form one of the pivots of the Forward23 strategy . We recognise that people and their talent are the machinery behind all growth. The dynamism of business today requires our people to be equipped with special skills that will prepare them to manage the present and emerging risks of business. This means building the skills of tomorrow and offering horizontal and vertical career and education paths. Also, talent mobility (both physical and virtual) increases access to skills and new opportunities for growth, which in turn improves employee morale and helps retain talent that are deemed critical for the organisation. At CIMB, our approach is to boost the skills of both our current and future workforce. The idea is to future-proof our people as well as our business. We believe that effective and efficient mechanisms to manage talent acquisition, growth and retention can ensure business continuity, productivity, performance and competitiveness. P R O M O T E D # T E A M C I M B A N D C I M B VA L U E S We see culture-building in CIMB as an ongoing journey and this journey started in 2015 with the introduction of the A Better CIMB (ABC) anchored on 3 Critical Behaviours: Go the extra mile to delight the customers Respect each other, engage openly and work together Recognise each other’s efforts and always back each other up To deepen our employees’ understanding of the 3 Critical Behaviours and embed them into the fabric of our employees’ daily lives at work, we conducted a 3 Critical Behaviours bite-sized campaign, which included the following steps: • Breaking down the three behaviours to six • Agreeing on and defining the meaning behind each behaviour • Explaining them to employees consistently via multiple online and offline channels including via the network of ABC Change Agents made up of 135 Business Sponsors (BSPs) and 1,750 Informal Leaders (ILs) from across the region • Conducting 61 engagement activities in Malaysia to better acquaint employees and recognise those who demonstrated the behaviours • Showcasing role models nominated by their peers for demonstrating the behaviours Cross-functional campaigns were also conducted for some of the behaviours which was the case with Customer Experience to further strengthen understanding. In 2019, we initiated the next phase of culture-building with a refresh of our values. We see our shared values as a positive force that shapes the culture of #TeamCIMB, informing the way we work with our various stakeholders to achieve a shared purpose. It creates a sense of belonging and affiliation, instils pride and helps in decision-making. 89
92. human capital development OUR VALUES CUSTOMER OBSESSED We are here for our customers , to ensure they’re happy and satisfied. The refresh was timely and in tandem with the shift in societal values from ‘competitiondriven businesses’ to ‘purpose-driven networked organisations and people’. We saw a need for increased and meaningful connections as well as more appetite for building partnerships and co-creation. Against this backdrop, we conceived C.H.I.D.A for a Group-wide roll-out in 2020. Our purpose of ‘Advancing Customers and Society’ rests on our corporate values, which define our culture and motivate action towards building #TeamCIMB, A Better CIMB. We continue to highlight success stories, especially those with the most active ABC networks. Consumer Credit Operations (CCO) HIGH PERFORMANCE We always strive to go above and beyond in everything we do. We noted zero failed audits for this department that has more than 3,000 people across the region. CCO worked to make the 3 Critical Behaviours a way of life, with regular formal and informal engagements as well as a recognition programme to reward those who demonstrated the critical behaviours. Group Operations INTEGRITY We’re always honest, responsible and accountable in everything we do. Be vigilant, be alert, be thorough. DIVERSITY AND INCLUSION We believe everyone has something to contribute, regardless of race, gender or opinions. AGILITY We must respond quickly to change and be problem solvers. 90 Following a restructuring exercise, Group Operations turned into a standalone function to consolidate all operational activities across the Group. One major change was the centralisation of the reconciliation team which had 50 employees. In 2019, they were tasked to drive the centralisation of the reconciliation process across Group Operations and reduce manual activities. The work was complex and the challenges included team members who were used to different leadership styles. The management prioritised ‘bridging trust’ issues, helping team members adjust to new working styles. The leaders engaged openly with their team members, encouraged a culture of transparency, engaged continuously, and set aside time for fun team activities and coaching. Employees were also given opportunities to upskill/reskill via job rotations and training. By end 2019, the team saw a 47% reduction in outstanding reconciliation items, implemented SOPs and have now embarked on building an automated reconciliation process.
93. AC C E L E R AT E D E F F O R T S T O C R E AT E A N D S T R E N G T H E N O U R D I G I TA L S K I L L S The banking sector is undergoing continuous transformation . Digitalisation of the workforce is becoming more of a cross-sector industry norm. At CIMB, we are focusing our efforts on diversifying our talent sourcing channels. We believe that efficient and effective implementation of CIMB’s strategic and sustainability roadmaps will depend on the quality of our talent and how they are increasingly adept in meeting the future needs of the organisation. Our two-pronged approach is as follows: Launching specific programmes that are designed to build digital skill set, with an objective of orientating and recruiting high-potential technology talent from universities as well as industry players. These initiatives are also our opportunities to position CIMB as the preferred tech talent employer. Initiative The Digital Apprenticeship Programme APPRENTICESHIP PROGRAMME Initiative The Complete Banker (TCB) Digital TCB 2019 Progress • A highly-structured internship programme that combines classroom learning with job rotations and learning outcomes jointly pre-defined between partner institutions and CIMB. • Apprentices are offered positions in CIMB’s graduate programme upon successful completion. • In the spirit of social inclusion by providing pathways into careers in the digital economy, the institutions identified for the pilot programme were mainly polytechnics and public universities whose students are largely from families that are in the B40 and lower M40 categories. • Conducted outreach and engagement activities with two polytechnics and two universities and enlisted 18 talents for the pilot programme. 2019 Progress • Targeted at grooming tech and digital talent, this newly-established graduate programme ensures that CIMB has the necessary talent with the right skills to thrive in the new digital economy in the long-term. In the immediate to medium-term, the programme contributes to the objectives of one of our Forward23 strategic pivots – People. • The programme combines classroom training and job rotations, aimed at equipping graduates with industry-specific knowledge and experience in developing solutions for banking and financial services, with mentoring from senior digital talent within the firm. • Recruitment started for the pioneer group, in preparation to launch to the wider public and universities in the following year. The target is to have a total of 40 participants for 2020. Enhance the digital quotient of all CIMBians across various levels and functions. In the mid-term, we aim to build an agile, innovative and tech-savvy workforce, which will meaningfully contribute to digital transformation of the Group. Initiative The CIMB 3D (Digital, Data, and Design) Academy 2019 Progress • Established to enhance the digital quotient of CIMB staff in all job roles ranging from basic awareness on certification level to enable the Group’s digital transformation. • A total of 11,389 employees participated in 3D Academy programmes from Malaysia, Indonesia, Singapore, Thailand and Cambodia across a variety of platforms (mobile, virtual, e-learning, in-house and external 3D training). • Delivered 78,219 training hours during the year, against the target of achieving 2.0 million hours by 2021. • Launched 3D training via mobile platform in Malaysia and Singapore to liberalise learning and making it accessible to all levels of employees anytime, anywhere. 91
94. human capital development Our 3D Academy competency framework is anchored on six pillars , namely digital world awareness; agile and entrepreneurial thinking; future communication skills; risk and governance; human-centred design; and data science and analytics. To raise our employees’ awareness, in 2019, we launched Gametize – a 3D education series in gamified content on a mobile platform. The inaugural edition of the CIMB 3D Conquest came to a close on 18 January 2019 with the grand finalé held in Le Méridien, Putrajaya. Organised in partnership with leading brands such as SAS, AWS, Cloudera, Oracle, Fusionex and Malaysia Airlines, the event aimed at positioning CIMB as an employer of diverse talent, attracting young talent, especially in the digital space. Open to all undergraduates, the two-day finals hackathon shortlisted 33 finalist teams from Malaysia, Indonesia, Singapore, Vietnam, and Thailand. In the spirit of inclusivity and developing digital skills among youth, the hackathon was divided into three tracks: Data Science, Coding and Fintech, allowing students from a variety of backgrounds to form multi-skilled and pluri-disciplinary teams to devise solutions based on real world case studies. Competitors were also coached and mentored by domain experts from various digital divisions within CIMB and partner organisations. The teams competing for a cash prize of USD48,000 for each track and the opportunity to visit Silicon Valley. The finalists were assessed for their problem-solving skills, analytical prowess, creativity, and also their ability to collaborate and communicate their vision. A total of 42 students were eventually recruited from the winners for TCB Digital, internships and other digital business units, contributing to the objectives of one of our Forward23 strategic pivots – Technology & Data. In 2019, we introduced the Digital Enablement Benefit. The benefit is targeted at junior-grades mainly to ensure that all employees have access to technology and digital learning platforms such as Gametize to gain new 3D skills, cloud-based career planning and internal personal branding tools such as Y.O.D.A. Under the policy, eligible permanent employees can claim up to RM50 per month for their data plan. This policy is in line with our values of diversity and inclusion, ensuring that we take all employees forward with us. 92 • Skills to manage, • Skills to help CIMB analyse and translate ‘digitise’ our business, the data we have into products and services. meaningful insights • Digital-first mindset. that CIMB can • Skills of current and capitalise on. emerging technologies to drive a seamless digital user experiences. • Skills to design products and services centred around people (customers and employees) and the ability to change our business model from what it is today. Our Group CEO, Tengku Dato’ Sri Zafrul Tengku Abdul Aziz, announced the winners, with cash prizes an immersion trip to Silicon Valley.
95. S T R AT E G I S E D A N D D E L I V E R E D T R A I N I N G A N D DE VELOPMENT We consider continuous learning and development as critical to not just be productive at the workplace but to also future-proof our employees . We take an inclusive approach to designing and delivering training and immersion programmes, including employees from various functions and levels. To ensure the pragmatic value of the content delivered is at optimum, we conduct regular training needs assessments for all employees. Based on the topics required, we deploy multiple learning methodologies and platforms. These include digital/online courses, class-room sessions, computer-based workshops etc. Progress in 2019 3.0 million TR A I N I N G H O U R S RM141 million TRAINING I N VE STM E N T A C R OS S T H E R E GI O N D E V E L O P E D TA L E N T P I P E L I N E F O R G R OW T H Talent Development At entry-level, we offer structured programmes to cater to various profiles and aspirations, providing young talent with options to pursue under The Complete Banker™ (TCB) umbrella. The TCB programmes create a pipeline of talent for management roles. TCB (Diversity Within Banking) TCB is a 24-month management programme open to graduates of all disciplines. It provides young graduates with exposure and experience in all areas of banking. With a recent curriculum upgrade, the programme now incorporates digital appreciation modules and options to experience cultural and language immersion in China, and regional rotations or secondment to fintechs. A total of 48 graduates were recruited during the year from across ASEAN. 30% of them were from Science, Technology, Engineering and Mathematics (STEM) and other non-finance and banking-related backgrounds. TCB Fusion (Diversity Beyond Banking) TCB Fusion is a 24 to 48-month programme that provides graduates with an opportunity to experience working in two different companies. We partnered with leading organisations in various sectors during the year: PwC (Accounting), Accenture (Consulting), Zico Law (Law), Teach for Malaysia (Non-profit) and DXC Technology (Technology). Upon successful completion of the programme, the associates have the option to decide their preferred employer. TCB Digital TCB Digital is the most recent addition to the TCB suite, targeted at digital and technology talent. Recruitment started at the end of 2019 for the programme, scheduled to launch in early 2020. In addition to the conventional training and development efforts, we also forged partnerships with institutions of excellence to deliver world-class programmes for our high-potential employees, especially the ones in mission-critical roles. CIMB-INSEAD The CIMB-INSEAD partnership is our flagship leadership programme, which delivers bespoke leadership coaching to senior and top management. During the year, the programme anchored around ‘Leading in the Fourth Industrial Revolution (IR4.0)’, and preparing talent to navigate digital disruption. A total of 31 members of the management were required to complete an action learning project on digital technology and innovation with exposure to venture capital style pitching. The project allowed participants to immerse in the digital space through site visits and dialogues with industry practitioners from the start-up ecosystem in Paris. The participants had an opportunity to further apply their learning with a Venture Capital (VC) challenge at the end of their training. Accelerated Universal Bankers Programme Another flagship initiative is our Accelerated Universal Bankers Programme, a customised leadership programme developed in partnership with Nanyang Technological University. Targeted at middle management, the programme’s objectives are to encourage cross-functional camaraderie and collaboration among middle managers, to prepare them for the IR4.0 and for senior management roles through action learning projects, enabling cross-pollination of ideas and allowing them to become well-rounded bankers. More than 33 members of our middle management successfully completed this programme in 2019. 93
96. human capital development P R E PA R E D E M P L OY E E S F O R CA R E E R T R A N S I T I O N S A N D L I F E B E YO N D WO R K  (GRI: 404-2) Equipping Employees with Skills of the Future After its launch in 2018, the Future of Work Centre (FOWC) continued in its mission to provide a comprehensive approach to future-proofing and getting our workforce ready for the digital economy. FOWC offers a wide menu of options to meet the different career aspirations and varying personal circumstances of our employees. Some of the career development interventions are as follows: In 2019, we launched Y.O.D.A. - an acronym for Your Own Digital Assistant. It is a mobile-enabled cloud-based Human Resource Information System (HRIS) that empowers employees and allows them to take charge of their own careers through a number of features: Upskilling and Reskilling Employees are upskilled or reskilled to perform the roles that are currently in demand, with an aim of increasing individual employability within and beyond CIMB. The idea is also to help employees grow their income and livelihood. As at 31 December 2019, we have reskilled and upskilled 2,205 employees regionally. Design their own learning Digital onboarding Nominate a mentor or a mentee Internal Talent Mobility The concept of internal mobility at CIMB is premised on growth and learning opportunities. Employees have the option to be considered for internal vacancies, with permanent transfers into the new roles, internal internships to put into practice newlyacquired skills, and stretch assignments over and above their current roles. In 2019, we also facilitated internal mobility and organised our first internal career fair for Forward23 and received 450 applications for 188 approved positions. FlexMyCareer (FMC) In 2019, we introduced FlexMyCareer, an extension of the many options already available to employees under FOWC. The main aim is to equip employees with more choices and more control over their career direction and growth. The additional choices include opportunities beyond banking, entrepreneurial ventures, passion projects or early retirement. Under this scheme, employees are also offered a financial assistance package, add-on medical benefit coverage and a preferential rate for outstanding staff loans with CIMB, mainly to assist them to pursue their personal and professional goals. A Beyond Banking Opportunities Day was also organised with external partners consisting of workshops and talks for those keen to explore opportunities beyond banking. 94 Volunteer for community projects Recognise or endorse colleagues Create or participate in community learning Enhance personal branding Access learning on the go The platform is easy to use, intuitive and accessible on mobile devices, in line with cultivating a workforce with an agile and digital-first mindset. In the end it is about giving employees a personalised and wholesome employee experience. We organised pre-retirement workshops to help employees transition from working life to retirement. The full-day event titled “Forward Your Financial and Lifestyle Planning” brings together trainers and speakers from financial management consultancies, healthcare and lifestyle management providers to help our employees prepare for a stress-free and productive retirement. In Malaysia, two sessions were organised with a total of 105 participants.
97. I M P R OV E D D I V E R S I T Y AT T H E WO R K P L AC E Diversity of Skills The banking sector is evolving . Rapid advancement in technologies and digitalisation are changing the traditional business models of banks and the financial sector as a whole. Non-traditional and non-banking institutions are in line to secure banking licenses. Fintechs and digital solutions such as blockchain are redefining the customer experience and banking itself. To meet the growing challenges that come with these transformational and revolutionary sectoral developments, we continued to focus on developing the skill set of our employees across all levels. About 50% of our Associates under our graduate associate programme, The Complete Banker (TCB) and the CIMB ASEAN Scholarship Programme are from non-business disciplines such as engineering, mathematics, bio-medical sciences and psychology. In addition to recruiting from non-traditional pools, all of our Associates, regardless of their academic backgrounds, are given the opportunity to have job rotations beyond CIMB and the banking industry. These include opportunities in fintechs, start-ups and online payment institutions, which help build internal capabilities across various business functions. This initiative reinforces our commitment to equip our talent with critical skills required to compete in the digital economy. In 2019, we continued to monitor and assess the credentials of our Board members at a Group level as well as the Senior Management to map their competencies in critical areas such as Technology and Digitalisation; Compliance and Enterprise Risk Management; Banking and Finance; Accounting and Audit; Sustainability and Leadership. For instance, with Sustainability as one of our five strategic pivots under Forward23, 33% of our Board members are actively involved with non-profit environmental and or social organisations. Diversity of Abilities In CIMB Thailand, we collaborated with the Thai Red Cross and offered special funds to the tune of THB3.0 million (RM396,000) to suport a total of 27 PWDs. Meanwhile, we also hired three PWDs to work in Operations, Investor Relations and HR departments. The collaboration has been active since 2016 and even extends to hiring blind therapists to promote and raise awareness on PWDs among CIMBians. The efforts and positive impact from this initiative have been awarded and recognised by the Social Innovation Foundation and Ministry of Social Development and Human Security for three consecutive years. Gender Diversity In 2019, 56.4% of the total workforce in CIMB comprised of women. 47.5% of middle to top management positions comprised of women. The Board of CIMB Group Holdings Berhad currently comprises nine Directors, of whom one is a female, or 11% representation. The Board remains committed to achieve at least 30% female representation on the Board by 2020, whilst ensuring that diversity in skill set, experience, age and gender are met. The GNRC is currently considering new candidates to be nominated to the Board and is mindful of this requirement. The 30% female representation on the Boards target is also observed on the Boards of CIMB’s main subsidiaries. The subsidiaries that have achieved more than 30% female representation on the Board are CIMB Bank Berhad (40%), and CIMB Islamic Bank Berhad (33%). The CIMB Investment Bank Berhad Board is mindful of this requirement and is currently reviewing its composition with the view to nominate more female candidates for the Board. At entry level, we continue to ensure a robust pipeline of female talent. 43% of the most recent intake of TCB, were female. The programme is an important source of high potential talent for our future management. Inclusivity features strongly on our agenda and in line with this approach, we employ 11 Persons With Disabilities (PWDs) in Malaysia. CIMB Niaga also hired 12 new PWDs , adding on to the existing 23 PWD workforce, who were placed as Social Media Telemarketing Funding Officers and Personal Banking Officers. Empowering Women Series This was launched in August 2018 to enable CIMB women to gain inspiration from accomplished women leaders from diverse sectors. In 2019, the programme, themed, “Removing the Glass Ceiling in the Corporate World”, featured three distinguished speakers: Prof Emerita Datuk Dr Mazlan Othman, an Astrophysicist; Khai Lin Sng, Co-Founder of Fundnel, a technology-based private investment platform; and Teoh Su Yin, Senior Independent Director of CIMB Group. More than 120 CIMB women and men participated in this learning experience. We also continued to celebrate the winning spirit of CIMB Women on International Women’s Day, with a full-day of activities including a special panel featuring women from diverse backgrounds to speak on the topic of “Having It All – A Successful Career and a Fulfilling Life”. The panel members who inspired many with their stories included Chong Chye Neo, a Board Member of several public listed companies and former Managing Director of IBM Malaysia; Marion Caunter, a local celebrity; and Hiba Abdul Rahman, a cancer survivor and breast cancer advocate. 95
98. human capital development E N C O U R AG E D A S P I R I N G YO U T H T O F U L F I L T H E I R L E A D E R S H I P P O T E N T I A L CEO @Faculty CIMB continuously engages with local institutions of higher learning, academicians and industry, through our own programmes as well as through public sector initiatives such as CEO@Faculty, which started in 2015, as part of the Group’s contribution to the larger national agenda. The objective of these efforts is to bridge the gap between industry and academia by facilitating knowledge exchange, experience sharing, curriculum design advisory as well as to provide much-needed support to young talent. It comes in the form of workshops and mentoring, to raise career awareness among Malaysian undergraduates, especially to those in public institutions of higher learning. In 2019, as part of the CEO@Faculty programme, Dato’ Hamidah Naziadin, Group Chief People Officer adopted UiTM and UKM to conduct outreach programmes. A total of seven guest lectures to students and sharing sessions with faculty members were conducted in 2019 on topics ranging from IR4.0 to diversity and inclusion, representing approximately 30 hours of lectures and sharing sessions invested (excluding other activities). As a result of the continued efforts over the years, Dato’ Hamidah was one of five industry leaders identified for recognition by the Ministry of Education in 2019. PROTÉGÉ We also continued to support the Professional Training & Education for Growing Entrepreneurs programme, PROTÉGÉ (formerly known as SL1M), to provide routes to employability and careers. 250 Malaysian graduates were recruited for placement across various banking functions as part of an employability-enhancing graduate training scheme. In addition to providing work experience, we organised nine training sessions covering the following areas: Soft skills Financial literacy Fundamentals of marketing Sustainability Fundamentals Fundamentals Motivational talks of of banking and on confidence and entrepreneurship banking products career awareness 96
99. ASEAN Scholarship Another flagship initiative is the CIMB ASEAN Scholarship . In 2019, we introduced a maximum annual household income threshold of RM15,000 for Malaysian applicants. The main objective of this new requirement is to provide opportunity to youth from low and modest income families who would otherwise miss out on quality education and exposure. The net is cast wide to identify talent from different backgrounds, fields of study and location of study (in their own countries and abroad) so that with this, they might bring their life experiences and perspectives to the table. 32% of our scholars are pursuing STEM courses in fields such as Engineering, Computer Science, Actuarial Science and Mathematics of the scholars are studying in their respective home countries In 2019, we offered close to RM5.0 million in scholarships to 13 talents from six ASEAN countries, with internships, mentorship and guaranteed employment. The total allocation of RM38.9 million for 2016-2023 has benefited 63 students to date. We take pride in our vision to nurture and develop a regional talent pipeline for the Bank and in 2019, we realised this vision with the return of nine graduates from the first cohort of the ASEAN Scholarship programme. CIMB Young ASEAN Leaders 2019 The CIMB Young ASEAN Leaders (CYAL) is an annual programme with an overarching objective to grow and nurture the best of our young ASEAN leaders, and enable them to exchange ideas, broaden their perspectives, as well as gain cross-cultural experiences, while exploring a theme that is relevant to all ASEAN countries. In 2019, 50 delegates from all 10 ASEAN nations convened in Kuala Lumpur to deliberate and exchange ideas on the theme “Sustainable Indigenous Resources for Renewable Energy”. The Group explored how ASEAN countries can utilise renewable local natural resources to provide energy to sustain life and economic needs. Since 2012, CYAL has produced an alumni community of 350 bright individuals across ASEAN. During the CIMB Young ASEAN Leaders 2019, CIMB Foundation launched the CYAL Alumni to engage the alumni community and ensure continuing impact. The CYAL Alumni aims to: • Further enhance cross-cultural learning and partnership between ASEAN countries; • Provide further opportunities for the CYAL Alumni to inspire and enact change in their home country; • Provide further growth and career opportunities for the CYAL Alumni to develop their leadership capabilities and achieve their potential; and • Act as ambassadors for CIMB’s regional CSR initiatives. 97
100. human capital development I N T R O D U C E D A M O R E H O L I S T I C P E R F O R M A N C E A P P R A I S A L SYS T E M The Group ’s performance is tracked via a balanced scorecard with measures on profitability, cost, capital, shareholders’ return, medium to long-term strategic initiatives, as well as risk, audit and compliance. These success measures are cascaded through the organisation through KPI scorecards of individuals. Likewise, individual KPIs are based on a balanced scorecard, covering: • • • • • • financial targets customer experience measures long-term initiatives (where progress of milestones or ROI may be monitored) risk management and process controls audit and compliance findings people-related measures. Year-end assessments of individual performance are based on KPI achievements as well as the individual’s proficiency in required competencies. In 2019, KPIs were aligned towards our Forward23 strategy, with long-term focus areas on customers, technology, sustainability, partnerships and people. Emphasis continued on risk-adjusted performance measures such as risk-adjusted return on capital as well as reinforcing our culture of accountability and compliance. 100% of senior management’s scorecards in 2019 were developed centrally to ensure alignment to organisational priorities. During the year, we piloted newer approaches to performance management to include more regular conversations with employees, with strong focus on employee growth and career development. We also piloted a new compensation model that enhances linkage of pay to performance, and provides a clearer line of sight to drive performance. For more information on our progressive policies and programmes on employee welfare and well-being, refer to CIMB Group Sustainability Report 2019. 98
101. group BOARD OF DIRECTORS BOARD COMMITTEES GROUP CORPORATE ASSURANCE GROUP RISK GROUP LEGAL & COMPLIANCE GROUP CHIEF EXECUTIVE OFFICER GROUP COMPANY SECRETARY GROUP CORPORATE RESPONSIBILITY COUNTRY HEADS GROUP STRATEGIC COMMUNICATION GROUP WHOLESALE BANKING GROUP STRATEGY & DESIGN GROUP CONSUMER BANKING GROUP HUMAN RESOURCE GROUP COMMERCIAL BANKING GROUP TRANSACTION BANKING GROUP ISLAMIC BANKING GROUP CHIEF OPERATING OFFICER GROUP FINANCE GROUP TECHNOLOGY GROUP VENTURES & PARTNERSHIPS GROUP OPERATIONS BUSINESS UNITS BUSINESS ENABLERS 99
102. chairman ’s statement on D E A R S H A R E H O L D E R S , We are seeing a world that is transforming fast. The rules of the game we call business are changing even faster. Corporate Governance may have been about health and hygiene, but is potentially taken for granted, with environmental and social performance requiring attention and prioritisation. “It is my privilege to present the CIMB 2019 Corporate Governance Overview Statement, which speaks of our continuing efforts to strengthen stakeholder’ trust and manage our risk exposure through robust governance frameworks and practices. While we remain vigilant of the emerging risks to business requiring strong governance, we recognise the need for efficient monitoring and control mechanisms to meet our near-term goals and business priorities. In representing the universal regional ASEAN banking group, on behalf of the Board, I would like to reinforce my faith in the capabilities of the Group to safeguard the interests of our shareholders and stakeholders through governance at its best.” In early 2019, we witnessed a US Company, Pacific Gas and Electric Company (PG&E) filing for bankruptcy protection, while Sustainalytics, an independent global provider of Environmental, Social and Governance (ESG) and corporate governance research and ratings to investors, named this global leader an outperformer and ranked it in the 82nd percentile on governance. The PG&E is the first corporate casualty of climate change, mainly contributed by failure in governance and management. This could be true for any aspiring businesses as they grapple with the emerging ESG issues and risks into the future. At CIMB, sustainability is one of the five key focus areas of our Forward23. In implementation, governance alongside economic, environmental and social aspects of our business are pivotal to meet the objectives and targets defined for the five-year term. In other words, we believe that governance can have the highest impact on the efficiency, effectiveness and value creation ability of our deployed strategies and approaches. Therefore, we go beyond management structures, policies and processes, and make governance an integral part of the organisational culture. We place equal emphasis on adherence to the principles of good governance, especially when taking mission-critical decisions on a day-to-day basis, never losing sight of the emerging challenges of the future. In short, our efforts at CIMB are to continuously evaluate our existing systems towards shaping a robust governance framework – one that achieves a balance between near-term and mid-term business performance needs and long-term risks. This requires us to expand the criteria on which our governance practices are measured for their practical value for business and their ability to future-proof us and our people. The Board of CIMB is painstakingly diligent in its role, ensuring the members deliberate on governance approaches and issues adequately, including risks and matters material for both business and stakeholders. From incorporating governance and Economic, Environmental and Social (EES) risks into the Enterprise Risk Management Framework to how they impact key decisions on business and growth, the Board takes full accountability for positive performance on various means and metrics to good governance. The Board recognises that such high-degree commitment is non-negotiable and most critical to deliver shareholder and stakeholder value. Future Forward, good corporate governance will always be one of our main priorities as a leading bank in Malaysia. We will continue to be vigilant and ready to take it to the next level in order to protect the interests of all stakeholders. Datuk Mohd Nasir Ahmad Chairman 100
103. corporate governance (Pursuant to Paragraph 15.25(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) CIMB is strongly committed to ensuring that its systems, procedures and practices reflect a high standard of corporate governance. It has a well-defined and well-structured corporate governance framework in place to support the Board’s aim of achieving long-term and sustainable value, as well as fostering a culture that values ethical behaviour, integrity and respect to protect shareholders’ and other stakeholders’ interests at all times. For CIMB, it is also important to maintain leading governance practices given the highly regulated industry in which the Group operates and this is essential for the long-term sustainability of the Group’s businesses. In this respect, the Board Committees assist the Board to fulfil its governance role effectively. During the year ended 31 December 2019, CIMB’s corporate governance practices were consistent and complied with the following guidelines and best practices: 1) Bank Negara Malaysia (BNM)’s Corporate Governance Policy 2016 (BNM CG Policy) 2) Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia) 3) Malaysian Code of Corporate Governance 2017 (MCCG) published by the Securities Commission 4) Corporate Governance Guide 3rd Edition 2017 (CG Guide) published by Bursa Malaysia 5) Minority Shareholder Watch Group (MSWG)’s MalaysiaASEAN Corporate Governance Scorecard 6) Developments in market practice and regulations The Board and its Committees regularly review the governance framework and associated practices to ensure that they keep abreast with relevant corporate governance and regulatory requirements. In 2019, CIMB received, amongst others, the following awards for its group-wide efforts in upholding the highest standards of corporate governance and ethical conduct: 1) Industry Excellence Award – Finance (1st place) awarded by MSWG – ASEAN Corporate Governance Awards 2018 2) Excellence Award for CG Disclosure (1st place) awarded by MSWG - ASEAN Corporate Governance Awards 2018 3) Excellence Award for Overall CG & Performance (4th place) awarded by MSWG – ASEAN Corporate Governance Awards 2018 4) Most Outstanding Annual Report of the Year (Platinum) awarded by National Annual Corporate Report Awards (NACRA) 2019 5) Industry Excellence Award (Finance) awarded by NACRA 2019 6) Sustainability Reporting Award (Gold) awarded by NACRA 2019 7) Best E-Payment Bank awarded by Malaysia e-Payments Excellence Awards (MEEA) 2019 8) Best IBFT Bank awarded by Malaysia e-Payments Excellence Awards (MEEA) 2019 9) Best Islamic Finance Sukuk House awarded by Alpha SEA Regional Islamic Finance Awards 2019 10) Best Sukuk Bank awarded by Global Finance World’s Best Islamic Financial Institutions Awards 2019 11) Best FX Bank for Corporate Islamic Treasury – awarded by Alpha SEA Regional Islamic Finance Awards 2019 12) Best Cash Management Bank in Malaysia awarded by Alpha SEA Best Financial Institution Awards 2019 13) Best Equity House in Malaysia awarded by Alpha SEA Best Financial Institution Awards 2019 14) Best Institutional Broker in Malaysia awarded by Alpha SEA Best Financial Institution Awards 2019 15) Best Digital Bank in Malaysia awarded by the Asian Banker Excellence in Retail Financial Services Awards 2019 16) Best Retail Bank in Malaysia awarded by the Asian Banker Excellence in Retail Financial Services Awards 2019 Whilst Shareholders and the Board jointly provide oversight on the control and management of CIMB, the ultimate decision-making authority rests with the Shareholders at the Annual General Meeting (AGM) where, amongst others, the re-election and remuneration of the Directors and appointment of External Auditors are approved. The Board, on the other hand, is accountable to the Shareholders for the performance of CIMB. In this regard, the Board directs and monitors the business and affairs of CIMB on behalf of the Shareholders. The Board also oversees and appraises CIMB’s overall strategic objectives, direction and performance, with some oversight delegated to the Board Committees. The Group Chief Executive Officer/Executive Director (Group CEO), who also sits on the Board as the sole Executive Director, is responsible for the development and implementation of CIMB’s strategy and its overall day-to-day running. Consistent with CIMB’s primary objective to enhance long-term shareholder value, this includes providing direction on all aspects of operational matters such as financial, risk management and compliance. The Board delegates to the Group CEO, together with the Senior Management of CIMB, the authority for managing CIMB’s business to achieve its corporate targets and plans. 101
104. corporate governance overview statement Shareholders Board of Directors Board Risk & Compliance Committe Group Nomination & Remuneration Committee Audit Committee Group Shariah Committee Group CEO Group EXCO Group-wide Committees Divisional Committees ENTITY GOVERNANCE CIMB recognises that while the ultimate parent entity in the Group has the overall decision-making authority and is responsible for exercising adequate oversight over the group entities, the ultimate parent entity must nevertheless give due regard to these entities to exercise their own judgment. The CIMB Group operates through a diverse set of entities and ownership structures which may pose governance risks for the Group and for the individuals who are responsible for the management of these entities. In 2017, a governance framework was developed to address such risks and ensure that the operations of the entities remain robust. The framework serves to raise the bar for CIMB’s governance standards and focuses on accountability of the Group’s senior management. The framework also provides channels of communication to align the relationship between these entities, as well as with CIMB. To operationalise the framework, the Group Entity Governance Policy (Policy) was approved by the Board of CIMB in late 2017. Central to the Policy is the appointment of a “Responsible Officer” who is accountable for the entities assigned to him/her. The main role of a Responsible Officer is to escalate any issues to its Board and the Board of its parent entity, amongst others, that may impact the entity’s operations as well as the Group’s in a timely manner. Designated key control functions are identified to support the Responsible Officer in his/her role. Since its introduction in 2017, the Policy has reached its final phase with its full implementation from June 2019. The Policy will continue to be reviewed to reflect best practices as well as to align with regulations. 102 PRINCIPLE A: Country-level Committees B OA R D L E A D E R S H I P A N D EFFECTIVENESS BOARD RESPONSIBILITIES The Board’s primary role is to determine CIMB’s strategic objectives and policies to deliver sustainable value to its Shareholders. In ensuring the protection and enhancement of shareholder value, it takes into account the interests of stakeholders including employees, customers, suppliers, business partners, regulators, local communities, non-governmental organisations and the general public. The Board is ultimately accountable to Shareholders for the performance of CIMB, and is responsible for CIMB’s overall governance. The Board acknowledges the importance of a clear division of responsibility between the Chairperson and the Group CEO. The roles of Chairperson and Group CEO are therefore exercised by separate individuals to ensure optimal balance, resulting in increased accountability and enhanced decision-making. The Board is helmed by Datuk Mohd Nasir Ahmad, an Independent Director, who plays a key role in ensuring the Board operates effectively and fully discharges its legal and regulatory responsibilities. As the Chairperson, he also leads the Board in the oversight of the Management and in inculcating the right culture, values and behaviours, both at the top and throughout the entire organisation. Notwithstanding that Datuk Mohd Nasir is an Independent Chairperson, the Board nevertheless retained the role of Senior Independent Director (SID) on the Board, whose role is to serve as a sounding board to the Chairperson, a representative of the Non-Executive Directors and also act as an additional point of contact for all stakeholders who wish to convey any concerns in relation to CIMB Group. The Board has designated Teoh Su Yin as the SID.
105. The Board delegates responsibility for the overall business and day-to-day management of CIMB to the Group CEO , Tengku Dato’ Sri Zafrul Tengku Abdul Aziz. The Group CEO is responsible for leading Management and for making and implementing operational decisions, and is assisted by the Group Executive Committee. To further promote CIMB’s sustainability agenda, the Board has designated Robert Coombe as CIMB’s Sustainability Sponsor. His role includes advising and recommending to the Board on business strategies from the aspect of sustainability and acts as an advocate within the organisation and externally. The Board has appointed the Group Company Secretary who, under the direction of the Chairperson, is accountable for all matters with regard to the proper functioning of the Board as well as to facilitate effective information flows within the Board and Board Committees and between Senior Management and NonExecutive Directors. The Group Company Secretary is also tasked to facilitate the induction of new Directors and the ongoing professional development of all Directors. Datin Rossaya Mohd Nashir is currently the Group Company Secretary and has been with the Group since 2002. The roles of the Chairperson, SID, Group CEO, Sustainability Sponsor and Group Company Secretary are specified clearly in the Board Charter. CIMB’s Board Charter sets out the Board’s strategic intent, authority and terms of reference and serves as a primary source of reference and induction literature. In addition, the Board Charter outlines the requirements, roles and responsibilities of the Board, Board Committees and individual Directors. To ensure that it remains relevant, the Board Charter is reviewed every three years or as change arises to ensure CIMB remains at the forefront of best practices in governance. The Board Charter is available at CIMB website at www.cimb.com. In terms of Board and Board Committee meetings, the Board Charter provides that Directors should receive meeting materials five days prior to the Board meeting to allow sufficient time for Directors to review and analyse relevant information. The deliberations and decisions arrived at during Board meetings are clearly minuted in a timely manner and action items for Management will be communicated to the relevant parties within 24 hours after the Board meetings. The draft minutes are then tabled at the following meeting for confirmation and thereafter signed by the Chairperson. The Board meets on a regular basis, with a minimum of six scheduled meetings in a financial year or at least once every two months or more frequently as circumstances dictate. The dates of these scheduled meetings are determined well in advance to enable the Directors to plan ahead. In addition to the scheduled meetings, Special Meetings may be convened as and when required. All Directors attended more than 75% of all Board meetings held in FYE 2019, and physically attended more than 60% of the scheduled Board meetings. Members of Senior Management have also been invited to attend selected Board meetings to support the Board with further information on the matters being deliberated. In addition to the scheduled meetings, the Non-Executive Directors have a framework and forum to meet separately to discuss specific matters without any executives present. Number of meetings convened by the Board and each Board Committee Number of meetings in 2019 Board 16 Audit Committee 17 Board Risk and Compliance Committee 7 Group Nomination and Remuneration Committee 16 Group Shariah Committee 8 Roles and responsibilities of the Board and Board Committees Board • Comprises nine Members of whom six Members are Independent Directors Main Areas of Oversight Number of meetings in 2019 The Board is responsible for the following: • Strategic/business plans of CIMB and the monitoring of Management’s success in implementing the strategies and plans; and CIMB’s annual budget • Conduct of CIMB’s business • Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures • Succession planning • CIMB’s Communications Policy • CIMB’s governance and internal control frameworks 17 meetings held to deliberate, amongst others, on the following: • Matters relating to the Company, the three Malaysian banking institutions and regional subsidiaries • CIMB’s Budget • CEO’s Quarterly Report • Quarterly Capital Management Update • Quarterly Shareholder Statistics Update • Quarterly Report on Directors’ Training, Directorships and Summary of Dealings outside Closed Period 103
106. corporate governance overview statement Main Areas of Oversight Number of meetings in 2019 Board (continued) • Group CEO’s and Directors’ appointments and their emoluments and benefits • Effectiveness and performance of the Board Committees of CIMB annually • Considering and approving the Financial Statements and interim dividend and recommend the final dividend to Shareholders prior to public announcements and publications as well as all circulars and press releases • Monitoring the performance of CIMB • Approving the changes on Corporate Organisation Structure of CIMB • Ensuring that there are adequate controls and systems in place to measure the implementation of the Group’s policies • Reviewing the adequacy and integrity of CIMB’s internal control systems and management information systems • Overseeing the decisions and actions of Management in achieving the Group’s goal to be a sustainable organisation, taking into account key issues related to EES aspects and impacts to the Group’s business activities. • Report from AC and GNRC • CIMB Group Risk Posture • Financial Statements • Interim Dividends • Formalisation/Updates to Group Policies • Re-appointment of External Auditors for the FYE 31 December 2019 • MFRS/IFRS 9 • Business Units Updates and Projects • Basel II/Pillar 3 Disclosures • Performance Assessment and Proposed Compensation for Executive Director • Compliance’s Quarterly Report • Anti-Money Laundering/CFT Report • Revision to the Terms of Reference of Board and Board Committees • Revision to the Board Charter • Board’s Annual Evaluation on the Effectiveness of the Management of Compliance Risk • CIMB Niaga 2019 Recovery Plan Update • KPI Scorecard for Group CEO • Governance on Remuneration of Senior Management and Material Risk Takers • Annual Evaluation Exercise for Board and Key Responsible Persons • Gap Analysis on Amendments to the Bursa Securities Main Market Listing Requirements • Forward23 – Strategy • Annual Insurance Programme Renewal • Touch & Go related matters • Sustainability Framework, Policy and Progress Audit Committee (AC) • Comprises three Members, all of whom are Independent Directors The AC has oversight and is responsible for the following: • Financial Reporting • Internal controls • Internal audit function • External audit reports • Related Party Transactions 17 meetings held to deliberate, amongst others, on the following: • Matters relating to CIMB, the three Malaysian banking institutions and regional subsidiaries • Matters relating to other non-banking subsidiaries of the Group • Annual Performance Review for Group Corporate Assurance Division (GCAD) and Group Chief Internal Auditor • GCAD’s KPIs for 2019 • Group Chief Internal Auditor and Direct Reports KPIs for 2019 • Two meetings with External Auditors without the presence of Senior Management • Documents pertaining to Annual Report 2018 • Related Party Transactions • Review of Financial Results • Update on AC’s Terms of Reference • MFRS/IFRS 9 updates • Reappointment of External Auditors • GCAD’s Annual Audit Plan • GCAD’s 2019 Mid-year Review Plan • GCAD’s revised Audit Plan 104
107. Main Areas of Oversight Number of meetings in 2019 • Audit and Non-Audit Services provided by External Auditors • Review of Performance Management System • Update on GCAD’s Policy • Updates on the Existing Guidelines for the Appointment and Re-appointment of CIMB Group External Auditors • Whistleblowing Investigation Process Flow • Forward23 – Review on Cost and Productivity • Data Analytics • GCAD’s Key Strategic Projects AC (continued) Board Risk and Compliance Committee (BRCC) • Comprises seven Members of whom five (including the BRCC Chairperson) are Independent Directors • All Members are Non-Executive Directors The BRCC has oversight and is responsible for the following: • Risk appetite • Risk governance • Risk frameworks • Risk management practices and policies • Risk strategy • Compliance Risk • Risk and Compliance Culture • Oversight on IT Risks • Compliance Framework • Anti-Money Laundering/Counter Financing Terrorism Risk Appetite • Compliance and Anti-Money Laundering/Counter Financing Terrorism Strategy Seven meetings to deliberate, amongst others, on the following: • Risk Management Policies • Risk Appetite for 2019 • Risk Profile and Strategy • Risk Management Objectives • Economics Position and updates • Compliance to Risk Posture • Demerit framework on Performance Ratings • Revisions to the Terms of Reference of the BRCC • Revised Market Risk Limit Framework of Group Wholesale Banking for 2019 • Updates on Guidelines and Policy Documents Related to Outsourcing • Group Compliance Reports • Compliance Work Plan for 2019 • KPI Scorecard for Group Chief Risk Officer and Group Chief Compliance Officer • Annual Performance Review for Group Chief Risk Officer and Group Chief Compliance Officer Group Nomination and Remuneration Committee (GNRC) • Comprises six Members of whom five Members (including the GNRC Chairperson), are Independent Directors • All Members are Non-Executive Directors The GNRC has oversight and is responsible for the following: • Boards’ and Board Committees’ Composition • Annual Evaluation exercise comprising: – Board Effectiveness Assessment – Fit and Proper Assessment of Directors, Chief Executive Officers/Executive Directors (CEOs/ EDs), Group Shariah Committee Members & Company Secretary • Succession planning for Boards, Board Committees, CEOs/EDs and Senior Management • Reviewing remuneration packages based on the Group’s existing remuneration guidelines and framework for: – Directors – Members of the Board Committees – CEOs/EDs – Senior Officers (SOs) – Material Risk Takers (MRTs) • Governance matters in relation to the Board and Directors • Directors’ Development Plans 16 meetings held to deliberate, amongst others, on the following: • Board and Board Committees’ Composition • Annual Evaluation exercise • Remuneration of Board, Group CEO/EDs, SOs and MRTs • Setting of KPIs for Group CEO/ED • Policies on governance of the Group • Directors’ Development Plan • Revision to the Terms of Reference of the GNRC • Renewal of appointment of Group Shariah Committee Members • Review of CIMB Niaga’s remuneration framework • Macro structure and leadership changes • Board and Committee succession planning • Succession Plan for SOs 105
108. corporate governance overview statement Description of training and education provided to the Board during FYE 2019 : Mode of training Duration in day(s) Seminar 1 Conference 2 Seminar 1 Forum 1 Conference 1 CIMB Preferred: Financial Advisory Series 2019 Conference 1 World Bank Group and Cagamas: Conference on Constructing and Financing Affordable Housing Across Asia Conference 2 Conference 1 Emeritus Professor Jean-Phillippe Deschamps: A Boardroom Colloquium on Innovation Governance Seminar 1 Asian Corporate Governance Association: Corporate Governance Watch – How Does Malaysia Rank Conference 1 List of training attended Accounting and Audit Association of Chartered Certified Accountants (ACCA): ACCA Council Training CIMB: Regional Audit Planning Summit Capital Markets CIMB: Board Training Session, Morphic Asset Management Securities Industry Development Corporation: Business Foresight Forum 2019: New Business Direction 2035, Catalysts for Change Malaysian Economic Association: Conference Malaysian Economic Convention Financial Industry Governance Securities Commission: Corporate Governance Monitor 2019 Securities Commission: Briefing on Corporate Liability Provision and Anti-Corruption Workshop 1 Malaysian Institute of Corporate Governance: Forum on Corporate Governance in the Capital Market Forum 1 Complying with Section 17A of MACC Act 2009 Forum 1 Seminar 1 Dialogue 1 CIMB: Technology Risk Workshop Workshop 1 BNM/FIDE: Digital Assets – Global Trends, Legal Requirements and Opportunities for Financial Institutions Conference 1 Knowledge Group: Malaysia Technology Week 2019 Conference 1 BNM: MyFintech Week and Financial Industry Conference 2019 Conference 3 Seminar 1 Conference 1 CIMB: 3rd Directors Regional Sharing Session 2019 Dialogue 2 CIMB Young ASEAN Leaders 2019 Seminar 1 Prof Anil K. Gupta: 2nd Distinguished Board Leadership Series: Rethinking Strategy Conference 1 Bursa Malaysia: Invest Malaysia Kuala Lumpur 2019 Conference 2 Dr Andy Xie: Reading the Signs – The Next Financial Crisis and Potential Impact on Asia Invest Malaysia 2019 Conference 1 Forum 4 Malaysian Anti-Corruption Commission (MACC): Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” Information Technology Bank Negara Malaysia (BNM)/Financial Institutions Directors’ Education (FIDE): Dialogue with the Deputy Governor on the Draft Risk Management in Technology Policy CIMB: Technology 101 Briefing BNM/FIDE: Artificial Intelligence and Its Role in FI Leadership & Strategy World Economic Forum Annual Meeting 2019 106
109. Mode of training Duration in day (s) Conference 1 Kuala Lumpur Business Club: Budget 2020 Leading into the 12th Malaysia Plan Dialogue 1 Sovereign Investor Institute (SII): SII Global Government Funds Roundtable 2019 Dialogue 3 Forum 2 CIMB Group: Annual Management Summit 2019 Conference 2 CIMB: Annual Malaysia Corporate Day Conference 1 Others 6 Conference 1 Workshop 2 Forum 1 Dialogue 1 BNM/FIDE: ISRA Programme – Value Based Intermediation: Directors Role Workshop 1 Macquarie: Asean Conference 2019 – Malaysia Macro And Policy Day Conference 1 Seminar 2 Seminar 1 Conference 2 BNM: Regional Conference on Climate Change Conference 1 CIMB Group: The Cooler Earth Sustainability Summit Conference 2 Institute of Corporate Directors Malaysia: Climate Government Initiative Conference 1 UNEP FI: Social & Environmental Risk and Opportunities for Financial Services Players Dialogue 1 Shook Lin & Bok: Legal Risks Arising from Environmental Issues Dialogue 1 List of training attended Leadership & Strategy (continued) PNB Corporate Summit Khazanah Megatrends Forum 2019 CIMB: Board European Innovation Safari Bursa Malaysia: Demystifying The Diversity Conundrum – The Road to Business Excellence ICLIF Leadership and Governance Centre: Mandatory Accreditation Programme Perdana Leadership Foundation: CEO Forum 2019 Risk Management BNM/FIDE: Annual Dialogue with the CEO of Perbadanan Insurans Deposit Malaysia (PIDM) CIMB: Risk Management Course Others – Banking & Finance Related CIMB: Media Training Milken Institute: Asia Summit 2019 Sustainability Time spent on training during FYE 2019: Directors Time Spent in day(s) Datuk Mohd Nasir Ahmad 32 Teoh Su Yin 8 Robert Neil Coombe 3 Dato’ Mohamed Ross Mohd Din 18 Dato’ Lee Kok Kwan 16 Ahmad Zulqarnain Che Onn 18 Afzal bin Abdul Rahim (appointed on 31 January 2019) 12 Didi Syafruddin Yahya (appointed on 7 May 2019) 24 Directors Time Spent in day(s) Tongurai Limpiti (appointed on 7 May 2019; resigned on 30 December 2019) 2 Glenn Muhammad Surya Yusuf (resigned on 23 January 2019) – Watanan Petersik (resigned on 24 January 2019) – Tengku Dato Sri’ Zafrul Tengku Abdul Aziz 28 107
110. corporate governance overview statement The Board has also established a Code of Conduct which is underpinned by the core philosophy of “Creating Value, Enabling Our People and Acting with Integrity”. The Code of Conduct sets out the standards of behavior that are expected of all employees of CIMB in terms of engagement with customers, business associates, regulators, colleagues and other stakeholders. Further, the Code of Conduct provides guidance in areas where employees may need to make personal and ethical decisions. In addition to providing guidance, the Code of Conduct makes references to specific Group Policies and Procedures relating to conflicts of interest, bribery, corruption, money laundering/counter-financing of terrorism, customer management, whistle blowing and fraud management. In addition, the Board has also adopted a Code of Conduct for Directors that sets out the fundamental guiding principles and standards for Directors to carry out their duties. This Code applies to all the Directors of CIMB Group and is primarily based on the five fundamental principles of competence, integrity, fairness, confidentiality and objectivity as recommended by the Code of Ethics for the Financial Services Industry published by Financial Services Professional Board (FSPB). CIMB’s Whistle Blowing Policy sets out avenues for legitimate concerns to be objectively investigated and addressed. Under this Policy, individuals will be able to raise concerns about illegal, unethical or questionable practices in confidence and without the risk of reprisal. CIMB’s Whistle Blowing Policy is applicable to all employees, suppliers, vendors, associated stakeholders and CIMB’s customers. BOARD COMPOSITION The Board continuously strives to ensure that Directors have a collective mix of skills, experience, expertise and diversity to add value to Board processes and decisions. The Board currently comprises nine Directors, eight male and one female, of whom six are Independent, two are Non-Independent and the Group CEO, who is the Executive Director. Of the two Non-Independent Directors, one had previously served in various executive positions in CIMB. The other Non-Independent Director represents Khazanah Nasional Berhad, who is the largest major shareholder of CIMB. On 7 May 2019, CIMB welcomed two new Independent Directors to the Board, Didi Syafruddin Yahya and Tongurai Limpiti. Tongurai later resigned from the Board on 30 December 2019. The Board bade farewell to Glenn Muhammad Surya Yusuf and Watanan Petersik who retired on 23 January and 24 January 2019, respectively. Both Glenn and Watanan had served on the Board as Independent Directors since January 2010. During FYE 2019, no Independent Director had served on the Board for more than nine years from the date of his/her first appointment. This is in adherence to CIMB’s Board Charter which limits an Independent Director’s tenure of service to a maximum of nine years. 108 Board Composition of Directors Non-Independent Directors 33% Independent Directors 67% Board Member’s Tenure Below 3 Years 3 Years – Below 6 Years 0 5 10 The oversight on the overall composition of the Board and Board Committees resides with the GNRC. The GNRC comprises six Members of whom five Members (including Teoh Su Yin, the Chairperson) are Independent Directors. The GNRC is guided by the following quantitative and qualitative criteria when assessing the suitability of Directors for nomination: • appropriate size and the balance between Independent Directors, Non-Independent Directors and Executive Directors, • skills, background and experience, • diversity in terms of gender, nationality, ethnicity and geography, and • commitment to sustainability. In addition, the behaviours likely to be demonstrated by potential Non-Executive Directors will also be considered by the GNRC during interview sessions for new appointments to ensure an environment in which challenge is expected, achieved and maintained in the boardroom. Based on these criteria, suitable candidates will be identified to fill vacancies on the Board and Board Committees as and when they arise. The GNRC has access to a wide pool of candidates which includes recommendations by existing Board Members or Management and through external sources such as the Directors’ Register by FIDE FORUM and BNM; professional associations and also from independent search firms.
111. In 2019 , a self-evaluation exercise was conducted to determine the skills and experiences currently present on the Board. The results of the exercise were extracted into a Board Skills Matrix, from which the GNRC established a Board DNA to identify the desired profile of new Board Members to optimise the Board’s composition. The GNRC is also tasked to assess the effectiveness of the Board, Board Committees, individual Directors and the Group Company Secretary. The areas assessed under each category amongst others were as follows: • Board and Board Committees o Role played by the Chairperson o Contributions by the Directors o Board processes and information flow o Boardroom dynamics • 360° Peer Assessment o Understanding of the Group’s strategy and vision o Knowledge, skills and experience o Participation and contribution in deliberations o Willingness to challenge prevailing opinion From the 2019 exercise for FYE 2018 Board Effectiveness Assessment, the Board approved an action plan to address areas identified to improve the performance of the Board and Management. Pursuant to the Annual Evaluation Manual, an external consultant will be engaged to conduct an independent assessment exercise on the Board, Board Committees, individual Directors and the Group Company Secretary for FYE 2019 in 1Q 2020. External consultants are engaged for this exercise once every 3 years, with the last independent exercise conducted in 2016. This is in line with the requirement in BNM’s CG Policy. Gender Diversity Female 11% Male 89% Board Members’ Industry/Background Experience Accounting and Audit Banking and Finance Legal Risk Management Capital Market Operations Information Technology Consumer Marketing Human Resource Corporate Leadership Strategy Development & Implementation Innovation & Transformation Learning & Development International Experience 0 1 2 3 4 5 6 7 Board Members’ Nationality 10 5 0 Australian Indonesian Malaysian REMUNERATION The Board delegates to the GNRC the responsibility to set the overarching principles, parameters and governance framework relating to the Group’s remuneration matters. These have been documented in the CIMB Group Directors’ Remuneration Framework and CIMB Group Remuneration Policy. CIMB Group Directors’ Remuneration Framework: The CIMB Group Directors’ Remuneration Framework (Framework) sets out the methodology and formula on how Retainer Fees, Chairperson’s Premium and Meeting Fees of the Board are derived, as follows: • Comparison against CIMB’s industry peers; • BNM FIDE Forum Directors’ Remuneration Report 2015 formula; and Age Diversity 50 Years Old and Above 56% • Back testing the data against closest peers. Below 50 Years Old 44% The implementation of the Framework has been approved by the Shareholders at the 60th Annual General Meeting which was held in 2017 and is reviewed every 3 years by the Board through the GNRC. The Framework is designed to recognise the contribution of the Directors in relation to its fiduciary and statutory duties, risks and time commitment. The framework also serves to attract and retain Directors who have the desired experience and skills from various sectors. 109
112. corporate governance overview statement CIMB has established the Framework as follows : Retainer Fees (per annum) Chairperson’s Premium (per annum) Meeting Fees (per meeting) Chairperson* 170,000 510,000 5,000 Member 170,000 N/A 5,000 CIMB Group Holdings Berhad Board Audit Committee Chairperson N/A 100,000 5,000 Member N/A N/A 5,000 Board Risk and Compliance Committee Chairperson N/A 100,000 5,000 Member N/A N/A 5,000 Group Nomination and Remuneration Committee Chairperson N/A 100,000 5,000 Member N/A N/A 5,000 * Benefits-in-kind for the Chairperson of the Board include, amongst others, a driver, corporate club membership subscription and leave passage. The remuneration payable to the Directors by CIMB Group in 2019, are as follows: CIMB Directors Non-Executive Directors Fees (RM’000) Salary and/ or Other Remuneration (RM’000) Total (RM’000) Benefits-in-kind (RM’000) Datuk Mohd Nasir Ahmad 170 790 960 35 Teoh Su Yin 170 355 525 – Robert Neil Coombe 170 272 442 – Dato’ Mohamed Ross Mohd Din 170 385 555 – Dato’ Lee Kok Kwan 170 120 290 – Ahmad Zulqarnain Che On 170 165 335 – – – – – Didi Syafruddin Yahya (appointed on 7 May 2019) 111 95 206 – Tongurai Limpiti (appointed on 7 May 2019; resigned on 30 December 2019) 111 60 171 – Glenn Muhammad Surya Yusuf (resigned on 23 January 2019) 11 16 27 – Watanan Petersik (resigned on 24 January 2019) 11 10 21 – – – – – Afzal bin Abdul Rahim (appointed on 31 January 2019) Executive Directors Tengku Dato’ Sri Zafrul Tengku Abdul Aziz 110
113. CIMB Group Directors Non-Executive Directors Datuk Mohd Nasir Ahmad Teoh Su Yin Robert Neil Coombe Dato ’ Mohamed Ross Mohd Din Dato’ Lee Kok Kwan Ahmad Zulqarnain Che On Afzal bin Abdul Rahim (appointed on 31 January 2019) Didi Syafruddin Yahya (appointed on 7 May 2019) Tongurai Limpiti (appointed on 7 May 2019; resigned on 30 December 2019) Glenn Muhammad Surya Yusuf (resigned on 23 January 2019) Watanan Petersik (resigned on 24 January 2019) Executive Directors Tengku Dato’ Sri Zafrul Tengku Abdul Aziz Fees (RM’000) Salary and/ or Other Remuneration (RM’000) Total (RM’000) Benefits-in-kind (RM’000) 325 170 170 310 333 170 – 1,145 355 272 708 245 165 – 1,470 525 442 1,018 578 335 – 35 – – 31 – – – 326 215 541 – 111 60 171 – 566 16 582 – 162 10 172 – – 8,532 8,532 8 The Directors and Officers of CIMB are covered by Directors and Officers liability insurance for any liability incurred in the discharge of their duties, provided that they have not acted fraudulently or dishonestly or derived any personal profit or advantage. The insurance premium paid during the financial year amounted to RM1,018,690. CIMB Group Remuneration Policy The CIMB Group Remuneration Policy, which has been reviewed by the GNRC and approved by the Board, applies to all subsidiaries and overseas offices within CIMB and acts as a guiding principle in relation to the design and management of CIMB’s remuneration programmes. Three key principles of CIMB’s Remuneration Policy are as follows: Principle Purpose Approach Strong governance To ensure strong and independent oversight of the remuneration system • Oversight and review by GNRC • Guided by input from control functions, AC and BRCC Appropriate assessment of performance To support a performance-based culture which promotes prudent risk-taking and long-term sustainability • Performance measurement through balanced scorecard which includes both financial and nonfinancial goals, short-term and long-term perspectives and incorporates measures related to risk, compliance and process controls • Use of risk-adjusted performance measures i.e. risk-adjusted return on capital (RAROC) and economic profit • Deferral and claw back arrangements in variable remuneration schemes Market competitiveness To offer rewards that allow CIMB to attract, motivate and retain the right talent • Benchmarking against similar organisations in the geographies and industries in which CIMB operate 111
114. corporate governance overview statement Components of Remuneration Employee remuneration is composed of two main components – fixed and variable: Component Composition Purpose and Approach Fixed Consists of base salary and fixed allowances • Determined based on skills, competencies, responsibilities and performance of the employee, taking into consideration market competitive levels. Variable Payable annually through cash bonus and shares (through participation in the Equity Ownership Plan, described below) • Purpose of motivating, rewarding and retaining high performing employees who generate shareholder value and contribute to the success of the Group. • Performance-based and not guaranteed, reflecting the individual employee’s performance, and business unit or function performance as well as the Group’s results. • Portions of cash bonus may be subject to deferral. • Based on a selection criterion, shares may be awarded to employees through participation in the Group’s Equity Ownership Plan, where the value of award ranges from 20% to 60% of variable remuneration. The Equity Ownership Plan serves as the Group’s share-based long-term incentive plan, with the intent of: • aligning the interests of key personnel to that of shareholders; • mitigating a short-term mindset and cultivating a focus towards long-term sustainability; and • retaining key personnel with the Group. Shares under the plan are released progressively to the participants over three years. Any deferred variable remuneration (cash bonus and/or EOP shares) that has not been paid to or vested to the employee is subject to forfeiture or adjustment in the event of: • Resignation or cessation of employment with the Group • Misconduct • Material restatement of financial results Measurement of Performance The Group’s performance is determined in accordance with a balanced scorecard which includes key measures on profitability, cost, capital, shareholders’ return, medium to long-term strategic initiatives, as well as risk, audit and compliance positions. CIMB currently tracks two risk adjusted performance measures, RAROC and economic profit, which are adopted in phases across the Group. 112 The Group’s key measures are cascaded to the business units and enabler functions accordingly and subsequently to the KPI scorecards of individuals. The RAROC measure has also been cascaded to the KPI scorecards of key individuals in the organisation across the Group. For each employee, performance is tracked through KPIs in a balanced scorecard. In addition to financial targets, KPIs in the balanced scorecard usually include measures on customer experience, long-term initiatives (where progress of milestones or ROI may be monitored), risk management and process controls, audit and compliance findings, as well as people related measures. At the end of the year, performance of each individual is then assessed through the Group’s performance management framework which is based on 70% of the balanced scorecard and 30% of the individual’s proficiency in required competencies. Determination of Variable Remuneration Based on CIMB’s performance, the GNRC will determine the overall variable remuneration pool taking into consideration key performance measures and ensuring that CIMB does not pay variable remuneration at a level that would affect shareholders’ interest. The GNRC has the discretion to adjust the pool where required, based on performance, capital requirements, economic conditions, competitive landscape and retention needs. The Group pool will be allocated to the business units and functions based on their respective performance, measured through balanced scorecards and guided by the Group CEO. The allocation will also take into consideration inputs from the control functions such as Audit, Compliance and Risk.
115. Variable remuneration of each individual employee is then determined based on individual assessment and the adequacy of bonus pool allocated to the business unit /function to which the individual belongs. Variable remuneration of the individual may also be adjusted based on accountability of audit and compliance findings, or disciplinary action. The control functions of Audit, Compliance and Risk operate independently from the business units in CIMB, and have appropriate authority to carry out their individual functions without intervention from the business units. To prevent conflict of interest, remuneration of employees in these control functions are not dictated by business units that they support. Remuneration of the Group Chief Risk Officer, Group Chief Legal & Compliance Officer and the Group Chief Internal Auditor are approved by the BRCC and the AC. SENIOR OFFICERS AND MATERIAL RISK TAKERS Summary of 2019 Remuneration Outcome Breakdown of remuneration awarded to Senior Officers and Material Risk Takers for 2019: Senior Officers Variable – Shares 35% Material Risk Takers Fixed – Cash 39% Variable – Shares 20% Fixed – Cash 54% Variable – Cash 26% Unrestricted: 97% Deferred: 3% Senior Officers (SOs) of the Group are defined as the Group CEO, Group CFO and members of the Group Executive Committee (GEXCO). Total remuneration awarded to 18 SOs for the financial year 2019 was RM96.5 million. Variable – Cash 26% Unrestricted: 94% Deferred: 6% Material Risk Takers (MRTs) are defined as employees whose responsibilities have a material impact on the Group’s performance and risk profile, and employees whose responsibilities require them to take on material risk exposures on behalf of the Group. Total remuneration awarded to 44 MRTs for the financial year 2019 was RM109.9 million. Table 1: Guaranteed bonuses, sign-on bonuses and severance payments Category SOs (RM’000) MRTs (RM’000) Number of guaranteed bonuses – – Number of sign-on bonuses 3 2 Number of severance payments – – 9,315 408 Total amount of above payments made during the financial year 2019 113
116. corporate governance overview statement Table 2 : Breakdown of deferred remuneration SOs (RM’000) MRTs (RM’000) Total amount of outstanding deferred remuneration • Cash • Shares 1,577 76,036 2,985 55,072 Total amount of deferred remuneration paid out during the financial year • Cash • Shares 8,879 22,19 4 7,755 20,716 Outstanding deferred remuneration (performance adjustments): • Of which exposed to ex-post adjustments • Reductions in current year due to ex-post adjustments (explicit) • Reductions in current year due to ex-post adjustments (implicit) 100% – – 100% – – Outstanding retained remuneration (performance adjustments): • Of which exposed to ex-post adjustments • Reductions in current year due to ex-post adjustments (explicit) • Reductions in current year due to ex-post adjustments (implicit) – – – – – – Cash (RM’000) Shares (RM’000) Total (RM’000) 3,093 – 3,093 2,527 – 2,527 – 2,912 2,912 5,620 2,912 8,532 Category Examples of explicit ex-post adjustments include malus, claw backs or similar reversals or downward revaluations of awards. Examples of implicit ex-post adjustments include fluctuations in the value of shares or performance units. Table 3: Breakdown of Group CEO’s remuneration Name Category Tengku Dato’ Sri Zafrul Tengku Abdul Aziz Fixed remuneration Variable remuneration • Non-deferred • Deferred Total remuneration award for financial year 2019 PRINCIPLE B: E F F E C T I V E AU D I T A N D R I S K M A N AG E M E N T AUDIT COMMITTEE The AC is chaired by Dato’ Mohamed Ross Mohd Din and the members are Teoh Su Yin and Datuk Mohd Nasir Ahmad, all of whom are Independent Directors. Members of the AC have the relevant accounting or related financial management experience or expertise. The Chairperson of the AC has over 40 years of relevant experience, and is not the Chairperson of the Board. This is to promote robust and open deliberations by the Board on matters referred by the AC. 114 CIMB has in place a process to consider the appointment/ re-appointment of External Auditors, which is in line with BNM’s Policy on External Auditors. The process requires the AC to assess the External Auditors’ compliance with qualification criteria set out by BNM, which includes evaluating the independence, objectivity and performance of the External Auditors.
117. As part of its remit , the AC must ensure that the objectivity, independence and effectiveness of the External Auditors are maintained. As per the Board Charter, the AC will not appoint former key audit partner as its member unless the former key partner has observed a cooling-off period of at least two years before being appointed as a member of the AC. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK The Board is cognisant of its overall responsibility and oversight of CIMB’s system of internal controls and is constantly keeping abreast with developments in areas of risk and governance. To this end, the Board continues to be involved in determining CIMB’s level of risk appetite and identifying, assessing and monitoring key risks to safeguard Shareholders’ investments and CIMB’s assets, in a manner which enables CIMB to meet its strategic objectives. For this purpose, the Board has established governance and processes for reviewing the effectiveness, adequacy and integrity of CIMB’s system of internal controls and risk management. Whilst it is not possible to completely eliminate risks of failure in achieving CIMB’s objectives, the system of internal controls is designed to mitigate these risks by identifying, managing and controlling risks, including operational risk. CIMB employs an Enterprise-Wide Risk Management (EWRM) framework as a standardised approach to manage the risks and opportunities effectively. The EWRM framework provides the Board and Senior Management with a tool to anticipate and manage both existing and potential risks, taking into consideration changing risk profiles as dictated by changes in business strategies, external environment and/or regulatory environment. PRINCIPLE C: The BRCC is responsible for formulating and reviewing the risk management policies and risk appetite of CIMB. The BRCC also provides oversight and advice to the Board and Management in respect of the management of compliance risk. The BRCC comprises seven members, of whom five members (including the Chairperson) are Independent Directors. The BRCC is chaired by Robert Neil Coombe. Similarly, the AC reviews the effectiveness of internal controls, risk management processes and governance within the Group. GCAD reports independently to CIMB’s AC and provides independent appraisal on the adequacy, efficiency and effectiveness of risk management, controls and governance processes implemented by Management. The internal audit function is reviewed periodically by the AC to ensure its adequacy in performing its role. GCAD reports significant findings to the AC with recommended corrective actions. Management is responsible to ensure that corrective actions on reported weaknesses are executed within an appropriate timeframe. The deadlines committed by Management on corrective actions are closely monitored and undue delays have to be justified to the AC for approval. In addition, periodic external assessment of GCAD’s internal audit activity is conducted by qualified external independent reviewer to assess its conformance with The Institute of Internal Auditors International Standards for Professional Practice of Internal Auditing and the pertinent regulations. GCAD adopts the five components set out in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (COSO). I N T E G R I T Y I N C O R P O R AT E R E P O R T I N G A N D M E A N I N G F U L R E L AT I O N S H I P W I T H S TA K E H O L D E R S COMMUNICATION WITH STAKEHOLDERS CIMB is committed to having open, clear and timely communications with its stakeholders, both internally and externally. In an effort to raise the level of corporate credibility and governance as well as investor confidence, CIMB has designed a structured approach in its Group Strategic Communications Policy. This Policy clearly sets out the principles and various channels of communication, policies and procedures relating to dissemination of information to the Shareholders, media and other stakeholders. It is CIMB’s policy to ensure information disseminated is factual, accurate, clear and in a timely manner. Material information should be accessible by all stakeholders through broad public dissemination, as the Policy strictly prohibits individual or selective dissemination. Contact and communication with stakeholders are conducted through the designated spokespersons approved by the Board or the Group CEO. CIMB embraces both mainstream and social media as important communication channels with stakeholders as these channels allow immediate and easy access to information as well as provide a platform to gain feedback from the stakeholders. Apart from the mainstream media channels, CIMB also uses various social media channels such as Facebook, Instagram, Twitter, LinkedIn and YouTube to engage stakeholders and monitors these social media conversations to improve CIMB’s products and services. 115
118. corporate governance overview statement CONDUCT OF GENERAL MEETINGS The Board ensures that Shareholders are given sufficient notice and time to consider the resolutions that will be discussed and decided at the AGM . The AGM Notice includes details of the resolutions proposed, along with any relevant information and reports. CIMB held its 62nd AGM on 22 April 2019 with the Notice and Agenda of the AGM delivered to the Shareholders on 22 March 2019, this being 28 days before the meeting. The Notice and Agenda were also published in the local English and Bahasa Malaysia newspapers and made available on CIMB’s website at www.cimb.com. The 62nd AGM was attended by all Directors, Management and 3,139 Shareholders. The Chairperson, who chaired the proceedings, provided fair opportunity and time to all Shareholders to exercise their rights to raise questions and make recommendations. The proceedings of the 62nd AGM were recorded in the minutes of the meeting and made available within two weeks after the meeting on CIMB’s website at www.cimb.com. CIMB has leveraged technology to facilitate greater shareholders’ participation and enhance the proceedings of General Meetings. Resolutions during the 62nd AGM were arrived at via e-polling to enable all Shareholders to cast their votes. A Poll Administrator was appointed to conduct the e-polling process. SUMMARY The Board considers that CIMB has complied and applied the Principles of the MCCG in 2019, except for the following: • Practice 4.5 (The Board must have at least 30% women Directors) • Practice 7.2 (The remuneration of Top-5 Key Senior Management) • Practice 12.3 (To facilitate voting in absentia) The Board has identified those Practices where there is a departure and these departures will be addressed as follows: • An explanation for the departure; • Disclosure of alternative practice adopted and how the alternative practice achieves the Intended Outcome; • Actions which CIMB has taken or intends to take; and The Board currently comprises nine Directors, of whom one is a female, or 11% female representation. The Board remains committed to achieve at least 30% female representation on the Board, whilst ensuring that diversity in skill set, experience, age and gender is met. The GNRC is currently considering new candidates to be nominated to the Board and is mindful of this requirement. 30% of female participation on the Boards is also observed on the Boards of CIMB’s main subsidiaries. The subsidiaries that have achieved more than 30% of female participation on the Board are CIMB Bank Berhad (40%), and CIMB Islamic Bank Berhad (33%). The CIMB Investment Bank Board is mindful of this requirement and is currently reviewing its composition with the view to nominate more female candidates for the Board. PRACTICE 7.2 The Board has decided not to disclose, on a named basis, the top five senior management’s remuneration components including salary, bonus, benefits in-kind and other emoluments in bands of RM50,000. The Board believes that disclosure of key executives’ remuneration is neither to CIMB’s advantage nor in its business interests, given the sensitive nature of such information and the fierce competition for talent in the banking industry. Across the Group, CIMB currently discloses the remuneration of the top four management positions in their respective financial statements, as follows: 1. CEO, CIMB Group Holdings Berhad* 2. CEO, CIMB Bank Berhad* 3. CEO, CIMB Investment Bank Berhad 4. CEO, CIMB Islamic Bank Berhad * Positions 1 and 2 are held by the same individual PRACTICE 12.3 CIMB has yet to facilitate voting in absentia and remote participation by Shareholders at General Meetings. In 2018, CIMB continues to leverage technology and adopt e-polling as the preferred medium for Shareholders to cast their votes. CIMB will continue to explore and consider the recommendations in the MCCG on the use of technology for remote Shareholders’ participation and voting in absentia by FYE 2020. • The timeframe required to achieve application of the prescribed Practice. PRACTICE 4.5 The GNRC oversees the overall composition of the Boards and Board Committees in terms of the appropriate size, skills, gender diversity and the balance between Independent Directors, NonIndependent Directors and Executive Directors through annual reviews. 116 This Corporate Governance Overview Statement is made in accordance with the resolution of the Board dated 21 February 2020. For further information on the application of the practices encapsulated in the Principles of MCCG during the financial year, please refer to the Corporate Governance Report which can be found in www.cimb.com under https://www.cimb.com/en/ investor-relations/reports-and- presentations/annual-reports. html#read/
119. additional (As at 31 December 2019 pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) 1. U T I L I S AT I O N O F P R O C E E D S R A I S E D F R O M C O R P O R AT E P R O P O S A L S During the financial year ended 31 December 2019, the Group has collectively issued the following instruments: (G) USD40 MILLION BONDS (A) USD88 MILLION BONDS On 19 March 2019, CIMB Bank issued USD88 million 5-year floating rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of USD 3-months LIBOR + 0.85% per annum payable quarterly, will mature on 19 March 2024. (B) HKD700 MILLION BONDS On 4 April 2019, CIMB Bank, acting through its Hong Kong branch, issued HKD700 million 1-year fixed rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of 1.98% per annum payable annually, will mature on 4 April 2020 (subject to adjustment in accordance with the modified following business day convention). (C) USD30 MILLION BONDS On 15 April 2019, CIMB Bank, acting through its Labuan Offshore Branch, issued USD30 million 5-year floating rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of USD 3-months LIBOR + 0.80% per annum payable quarterly, will mature on 15 April 2024 (subject to adjustment in accordance with the modified following business day convention). (H) IDR2,000,000 MILLION SUKUK On 21 August 2019, CIMB Niaga issued IDR2,000,000 million Sukuk. The Sukuk is divided into 3 series. Nominal value of 1-year Series A Sukuk, 3-year Series B Sukuk, and 5-year Series C Sukuk amounted to IDR635,000 million, IDR936,000 million, and IDR429,000 million respectively, with fixed interest rate of 7.10%, 7.90% and 8.25% per annum respectively. (I) IDR1,823,000 MILLION BONDS On 19 December 2019, CIMB Niaga issued IDR1,823,000 million bonds. The bonds are divided into 3 series. Nominal value of 1-year Series A Bond, 3-year Series B Bond, and 5-year Series C Bond amounted to IDR276,000 million, IDR1,066,000 million, and IDR481,000 million respectively, with fixed interest rate of 6.50%, 7.55% and 7.80% per annum respectively. (J) IDR83,000 MILLION NOTES (D) HKD200 MILLION BONDS On 12 July 2019, CIMB Bank issued HKD200 million of a 5-year fixed rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of 2.35% per annum payable annually in arrears, will mature on 12 July 2024. (E) USD20 MILLION BONDS On 8 August 2019, CIMB Bank issued USD20 million 5-year floating rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of USD 3-months LIBOR + 0.73% per annum payable quarterly, will mature on 8 August 2024. (F) USD680 MILLION BONDS On 15 November 2019, CIMB Bank issued USD40 million 3-year floating rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of USD 3-months LIBOR + 0.58% per annum payable quarterly, will mature on the interest payment date falling in or nearest to 15 November 2022. On 19 December 2019, CIMB Niaga issued IDR83,000 million bonds with fixed interest rate of 8.05% per annum and maturity date of 19 December 2024. (K) SUBORDINATED DEBTS 2019/2029 USD15 MILLION On 15 May 2019, CIMB Bank PLC issued USD15 million subordinated loan which qualified as Tier 2 capital for CIMB Bank PLC for the purpose of computation of minimum Solvency Requirements by the National Bank of Cambodia (“NBC”). The subordinated loan was issued as a single tranche at a fixed rate of 4.5% per annum with a maturity of 10 years from the issue date with a call option starting at the end of year 5 and on each relevant coupon payment date thereafter. The redemption of the subordinated loan will be subject to NBC's approval. The subordinated loan was subscribed by CIMB Bank. On 9 October 2019, CIMB Bank issued USD680 million 5-year floating rate notes under its USD5.0 billion Euro Medium Term Note Programme established on 15 August 2014. The Notes, which bear a coupon rate of USD 3-months LIBOR + 0.78% per annum payable quarterly, will mature on the interest payment date falling in or nearest to 9 October 2024. 117
120. additional disclosures (L) SUBORDINATED LOANS 2019/2024 RM1.0 BILLION (Q) COMMERCIAL PAPERS RM550 MILLION On 28 June 2019, the Company issued RM1.0 billion Basel III-compliant Additional Tier 1 Capital Securities under the RM10 billion Basel III AT1 Programme, at 4.88% per annum with an Issuer's call option to redeem at the end of year 5 and on each coupon payment date thereafter, subject to approval from BNM. (M) SUBORDINATED NOTES 2019/2029 RM550 MILLION On 8 July 2019, CIMB Thai issued RM550 million Basel III compliant Tier 2 subordinated notes. The subordinated notes carry fixed interest rate of 4.15% per annum payable every six months. The subordinated notes will mature on 6 July 2029. CIMB Thai may exercise its right to early redeem the subordinated notes 5 years after issue date, and on each coupon payment date thereafter, subject to approval by the Bank of Thailand (“BOT”). (N) SUBORDINATED SUKUK 2019/2029 RM800 MILLION On 25 September 2019, CIMB Islamic issued RM800 million 10 years non-callable 5 years Tier-2 Junior Sukuk at 3.75% per annum, which was fully subscribed by CIMB Bank. (O) SUBORDINATED LOANS 2019/2029 USD15 MILLION On 25 September 2019, CIMB Bank PLC issued a USD15 million subordinated loans which qualified as Tier 2 capital for CIMB Bank PLC for the purpose of computation of minimum Solvency Requirements by the National Bank of Cambodia ("NBC"). The subordinated loan was issued as a single tranche at a fixed rate of 4.0% per annum, with a maturity of 10 years from the issue date with a call option starting at the end of year 5 and on each relevant coupon payment date thereafter. The redemption of the subordinated loan will be subject to NBC’s approval. The subordinated loan was subscribed by CIMB Bank. (P) SUBORDINATED DEBTS 2019/2029 RM800 MILLION On 25 November 2019, the Company issued RM800 million 10 years non-callable 5 years Tier 2 Subordinated debts bearing a fixed rate coupon of 3.85% per annum, payable on a semi-annual basis. The said subordinated debt was issued out of the RM10.0 billion Tier 2 subordinated debt programme. The proceeds from the issuance were used to subscribe to the RM800 million Tier 2 subordinated notes issued by CIMB Bank on the same day, based on similar terms. 118 On 10 May 2019, the Company issued RM550 million 3-month CPs under its Convertional Commercial Papers Programme. The CPs bear a discount rate of 3.76%. The Company redeemed the RM550 million Conventional CPs on 9 August 2019. (R) MEDIUM TERM NOTES (“MTN”) RM250 MILLION AND ISLAMIC MEDIUM TERM NOTES (“IMTN”) RM750 MILLION On 12 June 2019, the Company issued RM250 million 1-year MTN which will mature on 12 June 2020 and RM750 million 3-year iMTN which will mature on 10 June 2022. The MTN and iMTN carry interest rate of 3.80% and 3.95% per annum respectively, payable semi-annually in arrears. 2 . S H A R E S B U Y- B AC K During the financial year, the Company did not buy back any of its issued share capital from the open market. 3 . O P T I O N S , WA R R A N T S O R C O N V E R T I B L E SECURITIES There were no options, warrants or convertible securities issued during the financial year by the Group. 4. A  M E R I CA N D E P O S I T O RY R E C E I P T ( A D R ) O R G L O B A L D E P O S I T O RY R E C E I P T ( G D R ) The Group did not sponsor any ADR or GDR programme during the financial year under review.
121. 5 . I M P O S I T I O N O F S A N C T I O N A N D/O R P E N A LT I E S CIMB Bank Berhad and CIMB Islamic Bank Berhad were imposed with regulatory fines with regard to secrecy breaches and these were publicly disclosed in BNM’s website. See the link below: http://www.bnm.gov.my/index.php?ch=en_enforcement_action&pg=en_ea_regulatees&ac=1&bb=masterfile&lang=en The breaches were considered material where the wrong Quarterly Savings Account e-Statements were sent to 11,071 unintended recipients and e-Notices to 131 unintended recipients respectively. This has led to the disclosure of customer’s information to third parties. The details of the regulatory fines were as follows: No. Date of Action Taken Institution Provision Contravened Nature of Offence Action Taken Remarks Publication Notice/Press Release 1. 22/02/2019 17/05/2019 CIMB Bank Berhad • S. 133(1) of Financial Services Act 2013 (FSA) • Disclosure of customer information to third party • Compound – RM6,400,000 • The institutions had taken remedial steps to ensure the safety of customer information. http://www.bnm. gov.my/index. php?rp=ea%20 cimb • The institutions had taken remedial steps to ensure the safety of customer information. http://www.bnm. gov.my/index. php?rp=ea%20 cimb • Failure to • S. 48(1)(a) of comply with FSA read standards together with the issued by the Management of Bank Customer Information and Permitted Disclosures Policy Document 2. 22/02/2019 17/05/2019 • Disclosure of CIMB Islamic • S. 145(1) read customer Bank Berhad together with S. information to 261 of the third party Islamic Financial Services Act • Failure to (IFSA) comply with standards • S.58(1)(a) of issued by the IFSA read Bank together with the Management of Customer Information and Permitted Disclosures Policy Document 6 . N O N - AU D I T F E E S Non-audit fees payable to the External Auditors, Messrs. PricewaterhouseCoopers PLT and its affiliates amounted to RM2,526,000 for the Group and RM57,000 for the Company. 7. VA R I AT I O N I N R E S U LT S There were no material variations in results for the financial year ended 31 December 2019 from the unaudited results released on 28 February 2020. 8 . P R O F I T G UA R A N T E E The Group did not receive any profit guarantee during the financial year ended 31 December 2019. • Administrative Monetary Penalty – RM3,400,000 • Compound – RM3,200,000 • Administrative Monetary Penalty – RM1,700,000 9. R  E VA L UAT I O N P O L I CY O N L A N D E D PROPERTIES Please refer to the accounting policy on Property, Plant and Equipment in Notes K, L and N of the Summary of Significant Group Accounting Policies in the Financial Statements which are set out in the Financial Statements section of the Annual Report. 10 . M AT E R I A L C O N T R AC T S There were no material contracts entered into by CIMB Group and its subsidiaries involving Directors’ and major shareholders’ interest which were still subsisting as at the end of the financial year under review or which were entered into since the end of the previous financial year except as disclosed in Notes 53 to the Financial Statements which are in the Financial Statements section of the Annual Report. 119
122. statement on B OA R D R E S P O N S I B I L I T Y The Board affirms its commitment on its overall responsibility and oversight of CIMB Group ’s system of internal control and risk management, and is constantly keeping abreast with developments in areas of risk and governance. To this end, the Board is assisted by the Board Risk & Compliance Committee and the Audit Committee, which have been delegated with primary oversight responsibilities on the Group’s risk management and internal control systems. The Board remains responsible for the governance of risk and internal control, and for all the actions of the Board Committees with regard to the execution of the delegated oversight responsibilities. In discharging its responsibilities, the Board continues to be involved in determining the Group’s level of risk appetite and in identifying, assessing and monitoring key business risks to safeguard shareholders’ investments and the Group’s assets, in a manner which enables the Group to achieve its business goals and objectives amidst the dynamic and challenging business environment. For this purpose, the Board has ensured the establishment of key processes for reviewing the effectiveness, adequacy and integrity of the Group’s system of internal control and risk management. The Group Chief Executive Officer (Group CEO) and Group Chief Financial Officer have provided assurance to the Board that the Group’s risk management and internal control systems are operating adequately and effectively. KEY INTERNAL CONTROL PROCESSES The key processes that the Board has established in reviewing the adequacy and integrity of the system of internal control, including compliance with applicable laws, regulations, rules, directives and guidelines, are as follows: • INTERNAL AUDIT The Group Corporate Assurance Division (GCAD), formerly known as Group Internal Audit Division (GIAD), reports independently to the CIMB Group Audit Committee and the Banking Group Audit Committee and is independent of the activities and operations of the business and other support units. The principal responsibility of GCAD is to provide independent appraisal on the adequacy, efficiency and effectiveness of risk management, control and governance processes implemented by Management. In evaluating internal controls, GCAD adopts the 5 components set out in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (COSO); namely control environment, risk assessment, control activities, information and communication, and monitoring activities. COSO is an internationally recognised organisation providing thought leadership and guidance on internal control, enterprise risk management and fraud deterrence. GCAD’s scope of coverage encompasses all business and support units, including subsidiaries that do not have their own audit units. The selection of the units to be audited from the audit universe is based on an annual audit plan that is approved by CIMB Group Audit Committee and the Banking Group Audit Committee. The annual audit plan is developed based on assessment of risks, exposures and strategies of CIMB Group. Areas that are assessed to be high risk are subject to an annual audit, while those that are assessed to be medium or low risk are subject to a cycle audit. Notwithstanding the risk assessment, the annual audit plan will include areas that must be audited annually due to regulatory requirements, and other established criteria such as recent incidence of fraud, previous adverse audit rating or recent action by regulators. GCAD also undertakes investigations into suspected fraudulent activities, staff misconduct, whistleblowing cases, potential secrecy breach, and other incidences, as and when required, and recommends appropriate improvements to prevent recurrence and actions against persons responsible. GCAD has unrestricted access to information required in the course of its work. GCAD’s scope of work is established in accordance with The Institute of International Auditors’ (IIA) International Standards for the Professional Practice of Internal Auditing and relevant regulatory guidelines. The risk management and internal control systems are designed to manage risk exposures within the risk appetite set by the Board to achieve the Group’s business objectives. The systems provide reasonable assurance against the occurrence of any material misstatement, loss or fraud. In addition, regular testing on the adequacy, effectiveness, efficiency and integrity of the internal control systems and processes is conducted to ensure its viability and robustness. M A N AG E M E N T R E S P O N S I B I L I T Y Management is accountable to the Board and is overall responsible for the effective implementation of the Board’s policies and procedures on risks and controls. Its responsibilities in respect of risk management and internal control include: • Identifying, and evaluating the risks faced by the Group, and the achievement of business objectives and strategies; • Formulating relevant policies and procedures to manage these risks in accordance with the Group’s strategic vision and overall risk appetite; • Designing, implementing and monitoring the implementation of risk management framework and internal control system; • Implementing policies approved by the Board; • Implementing remedial actions to address compliance deficiencies as directed by the Board; and • Reporting in a timely manner to the Board on any changes to the risks and the corrective actions taken. 120
123. The Audit Report is the final product of an audit assignment , which provides the scope of audit work performed, a general evaluation of the system of internal control together with detailed audit observations, management responses, and timeline to implement GCAD’s recommendations. CIMB Group Audit Committee or Banking Group Audit Committee (as appropriate) reviews any exceptions or non-compliance raised and ascertains that appropriate and prompt remedial actions are taken by the management. GCAD conducts training routinely for relevant staff on governance and internal control matters from other divisions, including attachment of certain staff with GCAD for both classroom and on-the-job training. The foreign banking subsidiaries have their own Audit Committees and their own internal audit divisions. While Touch ‘n Go also has its own Audit Committee, the internal audit function for this subsidiary is carried out by GCAD. CIMB Group Audit Committee meets with the relevant subsidiary’s Audit Committee once a year to discuss governance and audit matters. The internal audit divisions of the foreign banking subsidiaries submit a report to CIMB Group Audit Committee once every quarter. These internal audit divisions follow the same audit planning and standards, and same audit rating methodology as GCAD with such modifications as necessary to suit local environment and regulations. As a means to objectively evaluate its service quality and to ensure it continues to improve its service delivery, GCAD has obtained ISO 9001:2015 Certification for its quality management system. In addition, external assessment of GCAD’s internal audit activity is conducted by qualified external independent reviewer at least once every five years to assess its conformance with The Institute of Internal Auditors (IIA) International Standards for Professional Practice of Internal Auditing and the pertinent regulations. The report for the last assessment was issued in 2018 by a top 3 accounting firm in Malaysia and the next assessment will be undertaken by 2023. • AUDIT COMMITTEE (AC) CIMB Group AC comprises three independent Non-Executive Directors. It is a Board-delegated committee charged with oversight of financial reporting, disclosure, regulatory compliance, risk management, governance practices and monitoring of internal control processes in CIMB Group. CIMB Group AC leverages on the work of the Banking Group AC and the respective Audit Committee of the foreign banking subsidiaries, and CIMB Group’s electronic collection system subsidiary, Touch ‘n Go. The Banking Group AC comprised of four independent Non-Executive Directors and one Non-Independent NonExecutive Director. The responsibility of the Banking Group AC is limited to CIMB Bank, CIMB Islamic Bank and CIMB Investment Bank and their subsidiaries. Senior Management, internal auditors and external auditors report to CIMB Group AC and the Banking Group AC (as appropriate) on the effectiveness and efficiency of internal controls. All significant and material findings by the internal auditors, external auditors and regulators are reported to CIMB Group AC and the Banking Group AC (as appropriate) for review and deliberation. CIMB Group AC and the Banking Group AC (as appropriate) review and ascertain that mitigation plans are implemented by senior management to safeguard the interests of CIMB Group and upkeep proper governance. Management of business and support units that are rated adversely by internal audit are counselled by the respective AC. CIMB Group AC also reviews all related party transactions, and audit and non-audit related fees proposed by the external auditors of CIMB Group. Presentations of business plans, current developments, operations, risks of the business and controls to mitigate risks are made by the relevant business and support units as and when deemed necessary by CIMB Group AC or the Banking Group AC. CIMB Group AC and the Banking Group AC members are invited to attend CIMB Group’s Annual Management Summit where key business and support divisions review their operations for the year, present and discuss strategies and plans for the coming year. • RISK MANAGEMENT AND CONTROL FRAMEWORK The Board recognises that sound risk management and internal control are integral parts of CIMB Group’s business, operations and decision-making, and are critical in ensuring CIMB Group’s success and sustainable growth. The emphasis on a strong risk management culture is the foundation of the control mechanisms within CIMB Group’s Enterprise-Wide Risk Management (EWRM) framework. The framework consists of an on-going process of identifying and assessing, measuring, managing and controlling, as well as monitoring and reporting material risks affecting the achievement of CIMB Group’s strategic business objectives. It provides the Board and its management with tools to anticipate and manage both the existing and potential risks, taking into consideration the changing risk profiles as dictated by changes in business strategies, the external environment and/or regulatory environment. 121
124. statement on risk management and internal control • The GRCC supervises the periodic group-wide stress testing exercises by endorsing appropriate scenarios based on projected macroeconomic conditions and recommending the results of the Stress Test exercise for the BRCC’s approval. To further enhance the cultivation of the risk management culture, CIMB Group employs the Three Lines of Defence model in implementing the EWRM framework, providing risk management accountability across the CIMB Group. The business units, as the first lines of defence, are primarily responsible for the identification and management of risks within their day-to-day operations. Group Risk and other control functions within the second line of defence provide oversight and perform independent monitoring of business activities with reporting to the Board and management to ensure that CIMB Group conducts business and operates within the approved risk appetite, and is in compliance with regulations. Group Corporate Assurance Division, as the third line of defence, provides independent assurance of the adequacy and effectiveness of the internal controls and risk management processes. The Board has also established the Board Risk & Compliance Committee, whose responsibilities, amongst others, include overseeing the effective implementation of the EWRM framework. • BOARD RISK AND COMPLIANCE COMMITTEE At the apex of the governance structure are the respective Boards, which decide on the entity’s risk appetite corresponding to its business strategies. In accordance with CIMB Group’s risk management structure, the Board Risk & Compliance Committee (BRCC) reports directly to the respective Boards and assumes responsibility on behalf of the Boards for the supervision of risk management and control activities, as well as non-compliances and deficiencies. The BRCC determines CIMB Group’s risk strategies and policies, keeping them aligned with the principles within the risk appetite. The BRCC also oversees the implementation of the EWRM framework and provides strategic guidance and reviews the decisions of CIMB Group Risk and Compliance Committee. In order to facilitate the effective implementation of the EWRM framework, the BRCC has established various specialised/ sub-risk risk committees within CIMB Group with distinct lines of responsibilities and functions, which are clearly defined in terms of reference. • • The GRCC is also responsible for recommending CIMB Group’s Risk Appetite Statement to the BRCC taking into consideration the budget, annual business plans and expected macroeconomic conditions. In implementing the Risk Appetite Statement across CIMB Group, GRCC, supported by CIMB Group Risk, encourages the timely escalation of all events (including non-compliances and deficiencies) which may materially impact the Group’s financial condition or reputation to the attention of GRCC for appropriate action. • The GRCC is further supported by specialised risk committees, namely Group Credit Committee; Group Market Risk Committee; Group Operational Risk and Resiliency Committee; Group Asset Liability Management Committee; and Group Asset Quality Committee, with each committee providing oversight and responsibility for specific risk areas, namely credit risk, market risk, non-financial risk, reputation risk, liquidity risk and capital risk. • Similar risk committee’s are established in each of CIMB Group’s overseas subsidiaries in their respective jurisdictions. Whilst recognising the autonomy of the local jurisdiction and compliance to local requirements, CIMB Group also strives to ensure a consistent and standardised approach in its risk governance process. As such, the relevant Group and Regional committees have consultative and advisory responsibilities on regional matters across CIMB Group as regulators allow. This structure increases the regional communication, sharing of technical knowledge and support towards managing and responding to risk management issues, thus allowing the Board to have a comprehensive view of the activities across CIMB Group. • COMPLIANCE FRAMEWORK The Board recognises that the Compliance function forms an integral part of CIMB Group’s risk management and internal control framework, and that a strong compliance culture reflects a corporate culture of high integrity and ethics. CIMB Group Legal & Compliance Division (GLC), reports independently to the Board. Appropriate governance has also been established with clear reporting lines by the local and regional compliance officers to CIMB Group Chief Legal & Compliance Officer and the respective local entity Boards, to the extent permitted by the regulations of the local jurisdictions. GROUP RISK AND COMPLIANCE COMMITTEE • The Group Risk and Compliance Committee (GRCC) which reports to the BRCC, performs the oversight function on overall risks undertaken by CIMB Group in delivering its business plan vis-à-vis the stated risk appetite of CIMB Group. In this regard, the GRCC reviews the Internal Capital Adequacy Assessment Process annually to ensure that all relevant risks have been identified and captured, and that CIMB Group has sufficient capital resources to undertake such risks in either normal or stressed business conditions. 122
125. GLC ’s responsibilities include identifying, assessing and monitoring the compliance risk associated with the business and support units or entities; and advise the Board, Management and officers of the business and support units or entities on relevant laws and regulations. All business and support units or entities must act in accordance with relevant laws, regulations and internal GLC policies and procedures. Under the Three Lines of Defence Model, all business and support units or entities as the first line of defence, are required to review, assess and establish the necessary control to ensure compliance to applicable laws and regulations. The entities or units are required to carry out periodic self-assessment on the adequacy of control and level of adherence to regulatory requirements. GLC will also conduct compliance reviews on business and support units/entities as part of the second line of defence assurance that regulatory requirements are in place. GLC has unrestricted access to all information, records and business premises of CIMB Group and has the authorisation to speak to any employee of CIMB Group about any conduct, business practice, ethical matter or other issue relevant to discharging GLC’s duties. The respective entity Boards, as well as the CIMB Group Board, are provided with compliance reports on a regular basis the findings and analysis of compliance risk including compliance risk assessment, incidences of non-compliance and deficiencies, corrective measures and information to facilitate the Boards having a holistic and overall view of all compliance matters across CIMB Group. GLC’s scope of coverage encompasses all business and support units including subsidiaries in Malaysia as well as outside of Malaysia including activities which are carried out by CIMB Group or on behalf of CIMB Group by third parties. As it is vital to have a robust and effective compliance framework in place to safeguard the interest of CIMB Group, stakeholders, customers/clients and employees, CIMB Group has in place compliance policies/standards with appropriate mechanisms and tools are driven at CIMB Group level to ensure consistency in managing compliance risk within CIMB Group. GLC requires all local and regional entities within CIMB Group to adopt and implement all GLC Compliance policies and procedures, which are reviewed on a periodic basis or as and when required to reflect current practices and the applicable legal/regulatory requirements. Trainings are conducted regularly to create compliance awareness and to facilitate its implementation of laws, regulations and internal GLC compliance policies within CIMB Group. • ANTI-MONEY LAUNDERING/ COUNTER FINANCING OF TERRORISM CIMB Group is committed to enforce an effective internal control system for Anti-Money Laundering/ Counter Financing of Terrorism (AML/CFT) in compliance with all related laws, regulations, guidelines and industry leading practices including in the jurisdictions that it operates. CIMB Group continues to strengthen its enterprise wide AML/CFT program through a risk based approach to ensure that the key measures emplaced to prevent and mitigate money laundering and terrorist financing commensurate with the business and compliance risks that have been identified and assessed. The AML/CFT program also provides guidance to all CIMB employees, requiring them to conduct business in accordance with applicable AML/CFT laws, rules and regulations. CIMB Group as a responsible member of the international financial community complies with all sanctions laws and regulations administered and enforced by the Malaysia Government and other regulators in the jurisdictions in which it operates and has dealings, including the sanctions practices adopted by its Agent/Correspondent Banks. CIMB Group has established its own Sanction program to comply with its obligations including screening of customers and transaction against the list issued to prevent dealings with sanctioned parties, conducting due diligence of a customer at on-boarding, transaction and on periodic basis, blocking and rejecting transactions for those that hit the list and forbidding and limiting business activities restricted under its Sanction program. The Group undertakes ongoing compliance review on its products, conduct and services provided to customers and continues to enhance its AML program to address areas requiring enhancement and/or implement risk mitigating factors. • SHARIAH RISK MANAGEMENT Under the EWRM Framework, Shariah non-compliance (SNC) risk is identified as one of the material risks for CIMB Group, specifically in relation to its Islamic banking business. The SNC risk is defined as CIMB Group’s possible failure to comply with Shariah requirements as determined by the relevant Shariah Committees and as prescribed in CIMB Group’s internal policies and procedures. The Shariah Risk Management Procedure has been developed to supplement Shariah Risk Management Policy in providing better understanding of SNC risk and to provide guidance and consistent approach to facilitate Business Units (BUs)/ Business Enablers (BEs) in managing SNC risk inherent in Islamic banking business. 123
126. statement on risk management and internal control In order to facilitate BUs /BEs in identifying inherent SNC risk in their areas adequately, the standard SNC risk description and Key Risk Indicator (KRI) related to SNC risk have been developed. BUs/BEs are required to capture relevant SNC risk in their Risk and Control Self-Assessment (RCSA) for mitigation and monitoring purposes. In addition, to expedite the escalation of SNC event to the Management and streamline the reporting procedures between SNC risk event and operational risk event, the Group Impact Classification Matrix relating to SNC risk rating has been revised. Among others, the potential SNC event as determined by Shariah Review will be rated as ‘High’ and must be escalated to Group Risk and Compliance Committee (GRCC) within 24 hours. • SHARIAH REVIEW The Shariah review function is carried out by Shariah Review & Assurance Centre of Excellence (“SRA CoE”) of Islamic Banking Compliance in line with the Bank Negara Malaysia (“BNM”)’s Shariah Governance Framework for Islamic Financial Institutions (“SGF”) 2011 and the Shariah Governance Policy Document (“SGPD”) 2019. SRA CoE’s main role is to conduct regular end to end assessment on the compliance of the operations, business, affairs and activities of CIMB Group with Shariah and Islamic regulatory requirements. SRA CoE, as a second-line of defence function, reports independently into the Board Shariah Committee (“BSC”) of CIMB Islamic Bank Berhad (“CIMB Islamic”), and reports functionally into the Chief Compliance Officer of CIMB Islamic, forming part of the CIMB Group Compliance Division as envisaged by the SGPD. The SRA CoE is staffed by qualified Shariah officers who are also qualified to undertake compliance function responsibilities and possess sound understanding of the relevant Shariah requirements. The SRA CoE has established the CIMB Group Shariah Review Policy and Procedures (“Shariah Review Policy & Procedures”), which sets out the policies for Shariah review function on the Islamic financial services, operations and activities of CIMB Group, encompassing regular examination and evaluation of CIMB Group’s level of compliance to the Shariah requirements, remedial rectification measures to resolve non-compliances and control mechanisms to avoid recurrences. In addition, the Shariah Review Procedures sets out the procedures for Shariah review execution, responsibilities of stakeholders and internal reporting process relating to Shariah non-compliance events, in line with BNM’s requirements. 124 In ensuring that the activities and operations of CIMB Group are Shariah-compliant, SRA CoE conducts post review of CIMB Group’s activities and operations in accordance with the annual Shariah review work plan approved by the BSC and the respective Boards of Directors of CIMB Group (“the Board”). In addition, SRA CoE conducts investigation on issues escalated by the stakeholders including from Shariah Audit and the business units to determine potential Shariah non-compliance and performs ad-hoc review as required from time to time by the regulators, BSC or the Board. Trainings on the Shariah Review Policy & Procedures, Shariah non-compliance reporting requirements, and all other relevant BNM’s policy documents are continuously conducted to educate and raise awareness of CIMB Group’s staff on the importance of complying with Shariah requirements. • SHARIAH AUDIT Shariah audits of the Islamic banking business are under the purview of Group Corporate Assurance Division (“GCAD”), which reports independently to both the CIMB Group Audit Committee and Banking Group Audit Committee, as well as to the Board Shariah Committee on audit matters relating to Islamic business operations and activities, particularly on Shariah compliance related matters. The principal objective is to provide an independent assessment and assurance designed to add value and improve the degree of compliance in relation to the Islamic banking business operations, as well as ascertain a sound and effective internal control system for Shariah compliance. The same audit methodology is implemented by GCAD in carrying out Shariah audits as with non-Shariah audits, which includes audit planning, test of control, substantive procedures, reporting and follow-up on remedial actions. The scope of a Shariah audit is established in line with the areas stipulated in Bank Negara Malaysia’s Shariah Governance Framework. GCAD, in collaboration with Group Human Resource, made an arrangement with a reputable Islamic banking association to provide relevant Islamic banking certification to its auditors. The programme encompasses 3 stages, namely Associate Qualification in Islamic Finance (“AQIF”), Intermediate Qualification in Islamic Finance (“IQIF”) and Certified Qualification in Islamic (“CQIF”). There are 20 auditors who have completed CQIF, 3 completed IQIF and another 2 completed AQIF.
127. • BOARD SHARIAH COMMITTEE • Advisory The Board Shariah Committee (“BSC”) is responsible for overseeing overall Shariah matters of CIMB Group in accordance with the relevant regulatory frameworks in the jurisdictions where CIMB Group operates in. BSC, amongst others, ensures that the Shariah rulings relating to Islamic banking and capital market products and services comply with the fundamental Shariah precepts and resolutions by the relevant Shariah authorities. Responsible for providing day-to-day Shariah advice and consultation to the business and support units based on the decision of the Shariah Committee. BSC is assisted by the Shariah Advisory and Governance department that functions as an internal adviser on Shariah matters to all Islamic business within CIMB Group. It serves as the intermediary between such units and the Shariah Committee. The Shariah Advisory & Governance department also serves as the Secretariat to the Shariah Committee as well as providing Shariah related training across CIMB Group. Additionally, Advisory and Research unit is supported by the Shariah Secretariat Unit which serves as the Secretariat to the BSC and the governance functions as well as the Shariah Learning & Development Unit that supports the training function. The details of these support functions are described as follows: • Secretariat Act as Shariah secretariat to BSC that includes coordinating meeting as well as communications and disseminating information among the BSC, the board and senior management; ensuring proper deliberation and dissemination of decisions of the BSC to relevant stakeholders; and undertaking administrative and secretarial functions to support the BSC. In addition to that, the function is also responsible in engaging with relevant parties who wish to seek further deliberation of issues from the BSC. The responsibility also includes coordinating submission of proposals to CIMB Group Nomination and Remuneration Committee, the respective Bank Boards and Bank Negara Malaysia on the appointment and reappointment of the Shariah Committee members. • Governance Responsible as coordinator for all Shariah organs namely Shariah Advisory & Governance Department, Shariah Review CoE of Group Legal & Compliance, Shariah Risk Management CoE of Group Risk and Shariah Audit of Group Corporate Assurance in the management and overall oversight on the governance of Islamic business of CIMB Group including without limitation the implementation of the Shariah Governance and the review of structures, mechanism, techniques and process for the purpose of end-to-end products development and other processes related to Islamic business of CIMB Group. In carrying out the above roles and responsibilities, the Shariah Advisory & Governance Department is guided by Shariah Advisory and Board Shariah Committee Secretariat Policy and Procedures. All communication between CIMB Group and the BSC will be facilitated by this unit. Policies and/or procedures from the respective Shariah organs within the Group serves as a solid platform for all the processes under the Shariah Governance Framework (SGF) as required by Bank Negara Malaysia. The implementation of the SGF is effected through the following functions: a) Shariah Research; b) Shariah Review; c) Shariah Risk Management; d) Shariah Audit. The Shariah Advisory and Governance department facilitates the implementation of Shariah Research and coordinates the overall Shariah governance, whilst Shariah Review, Shariah Risk Management and Shariah Audit functions are performed by CIMB Group Legal & Compliance, Group Risk and Group Corporate Assurance respectively. • SHARIAH RESEARCH The Shariah Research function is undertaken by the Shariah Advisory & Governance department which comprises qualified Shariah officers who conduct the pre-product approval process, advisory, research, vetting of issues for submission to the Shariah Committee. This unit is divided into two functions: • Research Responsible for performing in-depth research and studies on Shariah issues, preparing Shariah papers for all product proposal to be submitted to the Shariah Committee for approval as well as reviewing documentation to ensure consistency with Shariah requirements. 125
128. statement on risk management and internal control • Training Responsible in developing and managing the Shariah Learning and Development function. In addition to that, the function would assist the Group Learning and Development as well as regional teams to assess and review the existing training plans and to make recommendations as needed, to design the training requirement and to develop the training solutions. • GROUP EXECUTIVE COMMITTEE The Group Executive Committee (“GEXCO”) assists the Group CEO in providing management oversight over the CIMB Group business on key operational matters. It reviews and makes decisions on key financial and strategic matters including capital and principal investments for CIMB Group Holdings Berhad and its subsidiaries (“CIMB Group Entities”). The GEXCO’s role in relation to the Strategic Risk Management Framework (SMRF) includes: • To review, approve and/or recommend all major and key strategic matters; Risk and Compliance Committee for implementation across CIMB Group, where applicable. Operational procedures, on the other hand, are approved by CIMB Group Policy & Procedure Oversight Committee (GPOC) for implementation. The approved policies and procedures are timely disseminated to stakeholders. Reviews and updates are performed regularly on approved policies and procedures with the intent to ensure continuous improvements in operational efficiency while taking into consideration the changing industry profile on regulatory requirements, risks and internal control measures for mitigation, and new products and services. • PERFORMANCE REVIEW On an entity-specific basis, the Boards of CIMB and its major subsidiaries are regularly apprised of key financial and operating statistics, including legal and regulatory matters for deliberation and where necessary, to instruct that prompt actions are taken to resolve issues in a timely manner. With respect to reporting at a division-specific level, each core division presents its respective performance report at the monthly GEXCO meeting, where the report covers, amongst others, monthly financial performance, new business proposals and listing of defaulted accounts. Each division is assessed against the approved budgets and corporate objectives; and justification is provided for significant variances. Further, the GEXCO will discuss pertinent issues, strategy and corrective or improvement measures to be implemented, if required. • INFORMATION TECHNOLOGY RISKS Information technology is a critical component of the Forward23 strategy. In 2019, CIMB Group continued to enhance its Information technology space, including undertaking a large programme of staff training, customer education and technology improvements, which aims to strengthen our technology risk management & resiliency capabilities. The cyber security capabilities at CIMB has also been strengthened via the formation of a dedicated Cyber Security Defense Centre and Threat Monitoring & Intelligence unit. Our Information technology and resiliency programs is based on regulatory guidelines and internationally recognised technology, process and management standards. These standards include ISO 27001, which is an information security management system standard defined by ISO and internationally accepted best practice to demonstrate regulatory, compliance and effective risk management on information security. In line with the banking business growth and IT Infrastructure expansion, our technology design was regularly reviewed in 2019 and improved to support business growth in emerging areas, whilst effectively mitigating both internal and external risks. • To be notified by the Business Unit on the extent of strategic risk and the projected impact on expected earnings and capital; and • To provide guidance and/ or endorse risk mitigation plans to address strategic risk identified. The GEXCO takes on the monitoring and performance evaluation function. The GEXCO members are responsible to ensure that the Group is well run and delivers the outcomes which have been set by the Group CEO. The GEXCO monitors management actions with regard to improvements to the control environment, to manage risk events and compliance breaches tabled. In the event of a crisis, the GEXCO will be activated as the Group Crisis Management Committee. The GEXCO members report to the Group CEO on the performance of their business divisions in line with the Group’s strategy and other matters as directed by the Board and Group CEO. • INTERNAL POLICIES AND PROCEDURES Policies set out principles, standards and/or rules that determine the expectation and boundaries for taking and managing risks which are formulated to govern standard day-to-day operations and to manage the expected risks of CIMB Group. As such, CIMB Group’s policies are developed from the baseline of current regulatory requirements and industry best practices to govern the business and operations of CIMB Group. The policies of the business and support units are documented, endorsed by the GRCC or its subcommittee(s) and approved by the relevant Boards or Board 126
129. • CODE OF ETHICS Further to the introduction in January 2017, the Bank has launched a series of internal awareness campaigns on the Code. In addition to setting a clear tone from the top leadership, GHR has focused on actively engaging employees through branch visits and conventions to further embed integrity and infused a stronger focus on compliance culture within the Bank. • HUMAN RESOURCES POLICIES AND PROCEDURES The Human Resources Policies and Procedures (HRPP) of CIMB Group provides clarity for the organisation in all aspects of the human resource management in CIMB Group. CIMB Group reviews its HRPP periodically to ensure that the policies and procedures remain relevant, and appropriate controls are in place to manage operational risks. Group Human Resource updates employees of changes to policies and procedures via email messages/memoranda. These policies and procedures are also easily accessible by all employees via CIMB Group’s intranet portal, for employees to refer to at their convenience. • PEOPLE DEVELOPMENT Efforts to identify talent beyond the succession pool through the new talent classification framework have substantially strengthen the talent pool for CIMB Group through the unearthing of unpolished gems across the regions. In addition, succession realisation has started to bear fruit across the Group since the inception of the new Talent and Succession Framework in 2017 where critical roles have been filled internally and efforts to accelerate the readiness of our talent has glaringly intensified through our fit for purpose development suite. Internal internship has also been introduced to expose talent to functions and businesses beyond their comfort zone; mainly through involvement in the Forward23 initiatives. In addition, the continuous collaboration between Global Employee Mobility and Regional Talent Management has also been instrumental in driving international assignments as a key development intervention to prepare our people for their future roles. Successful secondments of our talent in the Fast Forward initiative in Thailand as well as deployment of our middle and senior talent across the Group through international assignments are testaments to our commitment to grow talent through experiential development. The introduction of the 360 Feedback Survey has also given us a platform to assess the leadership styles and organisation climate while promoting a culture of transparency. As part of the continuous effort to expose our talent to the best in class, they have been extensively involved in regional conferences and executive leadership programmes, both as participants as well as speakers. The Future Of Work Centre (FOWC) has also been introduced as part of the Group’s cumulative efforts aimed at equipping its workforce with essential skills and opportunities through the 3D (Data, Digital, Design) Academy, involvement in regional 3D initiatives, etc. in preparation for a future that will see them work alongside AI, robotics and data in a highly digitalised environment. • REMUNERATION CIMB Group’s remuneration philosophy aims to reinforce a pay-for-performance culture while ensuring appropriate risk-taking behaviour. The governance is established on all remuneration-related matters through CIMB Group Nomination and Remuneration Committee (“The Committee”), which reviews and approves remuneration policies and payouts together with the Board of Directors. Decisions on variable remuneration are made based on the performance of the respective units in CIMB Group and taking into consideration risk-adjusted performance measures such as Economic Profit and Risk Adjusted Return on Capital, which are incorporated in our scorecards and reporting. The Committee is also guided on their decisions according to the advice and assessment provided by CIMB Group’s risk, audit and compliance functions on the respective units in CIMB Group. CIMB Group has a deferred remuneration structure in place through an equity ownership plan, where the share awards are vested over 3 years. This share-based long term incentive plan applies to key personnel and senior management of CIMB Group, as well as identified material risk takers. The plan serves to align the interest of this group of employees to that of our shareholders and to increase focus towards long-term sustainability, as well as retaining them with CIMB Group. • CULTURE GHR ran a campaign called “ABC bite-sized” where the three critical behaviours were broken down to help employees better understand and remember the three critical behaviours. For this campaign, a different behavior, accompanied by real life testimonials from staff of how they live the behaviour, is promoted every two months using various channels – Email, Instagram, Branch/Departmental TVs & lift screens. GHR also piloted “Have Your Say” mailbox in GHR to provide an efficient mechanism and a safe space for staff to give suggestions and highlight concerns/issues both digitally and physically. Through this initiative we hope that many good ideas can be acted upon and implemented to help create a better working environment that fosters empathy, support and encourages open engagement. 127
130. statement on risk management and internal control • WHISTLE BLOWING In 2019, GHR has taken steps to increase the Whistle Blowing channels for its employees and third parties in making a disclosure. The additional channels are provided with a link to the Disclosure Form which can be found on CIMB Homepage (quick link via tile and landing page), CIMB Clicks and Sync-up. All new employees are also briefed on the Whistle Blowing during the Group Orientation programme. In addition, bunting on the Whistle Blowing are placed in our office premises besides screen savers on computers and pop-ups in the Human Resource Information System before the staff are allowed to proceed with their HR transactions. • ANTI-BRIBERY AND CORRUPTION One of the core values of CIMB Group is integrity, and CIMB Group will not tolerate any acts which are in breach of this value. CIMB Group firmly believes in acting professionally, fairly and with integrity in all business dealings and relationships. Whilst CIMB Group already has in place various policies and processes, which address some of the issues relating to bribery and corruption, a more comprehensive policy to cover areas of concern is deemed necessary in view that CIMB Group operates in many jurisdictions with anti-corruption laws. As such, in line with global best practices and good governance approach, CIMB Group has established the Anti-Bribery and Corruption Policy. As commitment to this Anti-Bribery and Corruption Policy, CIMB has also developed a No Gift Policy in our conduct with our customers in relation to entertainment and the receipt and giving of gifts. • BUSINESS CONTINUITY MANAGEMENT BCM program is in place as part of our ongoing commitment in ensuring business resilience throughout our Group. Continuity of service to our customers, together with all the supporting business processes, is fundamental to meeting our business objectives. The Management are responsible to ensure enterprise-wide implementation of sound BCM practices as part of good corporate governance and prudent risk management. We have put in place a sound BCM program aiming to deliver organisational resilience by ensuring that critical business process can continue or be recovered in a timely manner following a disruption and ensure the Group meets BCM statutory and regulatory responsibilities and that it adheres to accepted best practices. Our BCM Program is aligned to the organisation’s business vision and strategy. This is done by calibrating the Group’s BCM Program to the target level of preparedness, which is determined by the Group BCM Steering Committee. 128 Regular reviews, re-assessments and updates for BCM documentations/plans have been conducted to ensure adequacy, effectiveness and relevance of the business recovery strategies. These plans are rehearsed and tested on a regular basis. Our Group has a BCM department, whose primary role is to ensure effective coordination and supervision of all BCM activities by introducing integrated and standardised BCM approach across the organisation. R E V I E W O F S TAT E M E N T BY E X T E R N A L AU D I TO R S As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Audit and Assurance Practice Guide (“AAPG”) 3 issued by the Malaysian Institute of Accountants. AAPG 3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of CIMB Group. CONCLUSION The Board, through the Audit Committee, Board Risk and Compliance Committee and the Board Shariah Committee, confirms that it has reviewed the effectiveness of the risk management and internal control framework and considers CIMB Group’s system of internal control as adequate in safeguarding the shareholders’ interests and assets of CIMB Group. The Board also confirms that there is an effective ongoing process for identification, evaluation and management of significant risks in CIMB Group and is committed to ongoing review of the entire control, compliance and risk management controls.
131. risk R I S K M A N AG E M E N T OV E R V I E W A robust and effective risk management system is critical for our Group to achieve continued profitability and sustainable growth in shareholder value in today ’s globalised and inter-linked financial and economic environment. Our Group embraces risk management as an integral part of our Group’s business, operations and decision-making processes. In ensuring that our Group achieves optimum returns whilst operating within a sound business environment, the risk management teams are involved at the early stage of the risk-taking process by providing independent inputs, including relevant valuations, credit evaluations, new product assessments and quantification of capital requirements. These inputs enable the business units to assess the risk-vs-reward of their propositions, thus enabling risk to be priced appropriately in relation to the return. Generally, the objectives of our risk management activities are to: (i) identify the various risk exposures and capital requirements; (ii) ensure risk-taking activities are consistent with risk policies and the aggregated risk positions are within the risk appetite as approved by the Board; and (iii) create shareholder value through a sound risk management framework. E N T E R P R I S E W I D E R I S K M A N AG E M E N T F R A M E WO R K Our Group employs a Group Enterprise-Wide Risk Management (EWRM) framework as a standardised approach to effectively manage our risks and opportunities. The Group EWRM framework provides our Board and management with tools to anticipate and manage both the existing and potential risks, taking into consideration changing risk profiles as dictated by changes in business strategies, the external environment and/or the regulatory environment. The key components of the Group EWRM framework are represented in the diagram below: G O V E R N A N C E Risk Culture R I S K A & P O R G A N I S A T I O N P E T I T E Risk Management Process Business Planning Risk Identification & Assessment Risk Policies, Methodologies/ Standards & Procedures Risk Measurement Risk Management & Control People Risk Monitoring & Reporting Technology & Data Risk Management Infrastructure The design of the Group EWRM framework incorporates a complementary ‘top-down strategic’ and ‘bottom-up tactical’ risk management approach. The key features of the Group EWRM framework include: (i) Risk Culture: The Group embraces risk management as an integral part of its culture and decision-making processes. The Group’s risk management philosophy is embodied in the Three Lines of Defence approach, whereby risks are managed at the point of risk-taking activity. There is clear accountability of risk ownership across the Group. (ii) Governance & Organisation: A strong governance structure is important to ensure an effective and consistent implementation of the Group EWRM framework. The Board is ultimately responsible for the Group’s strategic direction, which is supported by the risk appetite and relevant risk management frameworks, policies and procedures. The Board is assisted by various risk committees and control functions in ensuring that the Group’s risk management framework is effectively maintained. (iii) Risk Appetite: Defined as the amount and type of risks that the Group is able and willing to accept in pursuit of its strategic and business objectives. Risk appetite is set in conjunction with the annual strategy and business planning process to ensure appropriate alignment between strategy, growth aspirations, operating plans, capital and risk. (iv) Risk Management Process: • Business Planning: Risk management is central to the business planning process, including setting frameworks for risk appetite, risk posture and new product/new business activities. • Risk Identification & Assessment: Risks are systematically identified and assessed through the robust application of the Group’s risk policies, methodologies/standards and procedures. • Risk Measurement: Risks are measured and aggregated using the Group-wide methodologies across each of the risk types, including stress testing. 129
132. risk management • Risk Management & Control: Risk management limits and controls are used to manage risk exposures within the risk appetite set by the Board. Risk management limits and controls are regularly monitored and reviewed in the face of evolving business needs, market conditions and regulatory changes. Corrective actions are taken to mitigate risks. • Risk Monitoring & Reporting: Risks on an individual, as well as a portfolio, basis are regularly monitored and reported to ensure they remain within the Group’s risk appetite. (v) (i) Market risk, arising from fluctuations in the value of the trading or investment exposure due to changes in market risk factors such as interest rates, currency exchange rates, credit spreads, equity prices, commodities prices and their associated volatility; (ii) Credit risk, arising from the possibility of losses due to an obligor, market counterparty or an issuer of securities or other instruments held, failing to perform its contractual obligations to the Group; Risk Management Infrastructure • Risk Policies, Methodologies/Standards and Procedures addressing all areas of material risks: Well-defined risk policies by risk type provide the principles by which the Group manages its risks. Methodologies/Standards provide specific directions that help support and enforce policies. Procedures provide more detailed guidance to assist with the implementation of policies. • People: Attracting the right talent and skills is key to ensuring a well-functioning Group EWRM framework. The organisation continuously evolves and proactively responds to the increasing complexity of the Group, as well as the economic and regulatory environment. • Technology and Data: Appropriate technology and sound data management support risk management activities. R I S K G OV E R N A N C E At the apex of the governance structure are respective Boards of entities within the Group, which decide on the entity’s risk appetite corresponding to its business strategies. Each Board Risk and Compliance Committee (BRCC) reports directly to the respective Boards and assumes responsibility on behalf of the respective Boards for the supervision of risk management and control activities. Each BRCC determines the relevant entity’s risk strategies and policies, keeping them aligned with the principles within the risk appetite. Each BRCC also oversees the implementation of the Group EWRM framework, provides strategic guidance and reviews the decisions of our Group Risk and Compliance Committee (GRCC). To facilitate the effective implementation of Group EWRM framework, our BRCC has established various specialised/sub-risk committees within our Group, each with distinct lines of responsibilities and functions, which are clearly defined in the terms of reference. 130 The responsibility of supervising risk management functions is delegated to our GRCC, comprised of senior management, and reports directly to our BRCC. Our GRCC performs the oversight function on the overall risks undertaken by the Group in delivering its business plans vis-à-vis the stated risk appetite of our Group. Our GRCC is supported by specialised risk committees, namely Group Credit Committee, Group Market Risk Committee, Group Operational & Resiliency Risk Committee, Group Asset Liability Management Committee and Group Asset Quality Committee, each addressing one or more of the following: (iii) Liquidity risk, arising from a bank’s inability to efficiently meet its present and future funding needs or regulatory obligations when they come due, which may adversely affect its daily operations and incur unacceptable losses; (iv) Operational risk, arising from risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events; (v) Interest rate/rate of return risk in the banking book, which is the current and potential risk to the Group’s earnings and economic value arising from movements in interest rates/ profit rates; (vi) Capital risk, arising from the failure to meet minimum regulatory and internal requirements which could incur regulatory sanction on our Group, thereby resulting in a potential capital charge; and (vii) Shariah Non Compliance (SNC) risk, arising from risk of possible failure to comply with the Shariah requirements determined by Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM) and Securities Commission (SC), Board Shariah Committee (BSC) of the Group and other Shariah regulatory authorities of the jurisdictions in which the Group operates. (viii) Sustainability risk, comprising environmental and social issues stemming from transactions/activities associated with a business relation and its operations and/or the Group’s own internal operations and employees.
133. The structure of CIMB Group Risk Committees is depicted in the following chart : Board of Directors Board Risk & Compliance Committee Board Shariah Committee Group Risk & Compliance Committee Group Operational & Resiliency Risk Committee Group Asset Liability Management Committee Group Credit Committee Group Asset Quality Committee Group Market Risk Committee Group Suitability Review Committee Group Underwriting Committee Deal Launch Committee Our overseas subsidiaries’ risk committees are set-up in a similar structure in their respective jurisdictions. Whilst recognising the autonomy of the local jurisdiction and compliance to local requirements, our Group strives to ensure a consistent and standardised approach in its risk governance process. As such, Group and Regional committees have consultative and advisory responsibilities on regional matters across our Group as regulators allow. This structure increases regional communication regarding technical knowledge. It further enhances support towards managing and responding to risk management issues, thus allowing our Board with a comprehensive view of the activities within our Group. THREE LINES OF DEFENCE Our Group’s risk management culture is embodied through the adoption of the Three Lines of Defence philosophy, whereby risks are managed from the point of risk-taking activities. This is to ensure clear accountability of risk across our Group and risk management as an enabler of business units. As a first line of defence, the line management (including key Business Pillars and Enablers) is primarily responsible for risk management on a day-to-day basis by taking appropriate actions to mitigate risk through effective controls. The second line of defence provides oversight and perform independent monitoring of business activities with reporting to the Board and management to ensure that our Group conducts business and operates within the approved appetite, and is in compliance with regulations. The third line of defence is Corporate Assurance Division who provides independent assurance of the adequacy and effectiveness of the internal controls and risk management processes. THE ROLES OF GROUP CHIEF RISK OFFICER (GROUP CRO) AND GROUP RISK Within the second line of defence is Group Risk, a function independent of business units. It assists our Group’s management and stakeholders in monitoring and controlling risk exposures within the Board-approved risk appetite statement. Group Risk is headed by our Group CRO, appointed by our Board to lead the Group-wide risk management functions, including the implementation of the Group EWRM framework. Our Group CRO: (a) actively engages the respective boards and senior management on risk management issues and initiatives; and (b) maintains an oversight on risk management functions across all entities within our Group. In each key country of operations, there is a local Chief Risk Officer or a local Head of Risk Management, whose main functions are to assess and manage the enterprise risk and liaise with regulators in the respective countries. 131
134. risk management The organisational structure of Group Risk is made of two major components , namely the Chief Risk Officer and the Risk Centres of Excellence (CoE). (a) • Non-Financial Risk Management CoE The Non-Financial Risk Management (NFRM) CoE ensures that the first line of defence manages their operational risk by providing an operational risk framework that enables them to identify, assess, manage and report their operational risks. The team also provides constructive challenge and assessment to the first line of defence’s execution of the operational risk framework and act as a consultant with the Group in providing operational risk expertise and reporting to senior management. The Shariah Risk Management (SRM) unit within the NFRM CoE facilitates the process of identifying, measuring, controlling and monitoring SNC risks inherent in the Group’s Islamic banking businesses and services. It formulates, recommends and implements appropriate SRM policies and guidelines; as well as develops and implements processes for SNC risk awareness. NFRM CoE also extend its specialist risk oversight to cover Business Continuity Management, Fraud, Technology and Outsourcing risks. • Asset Liability Management CoE The Asset Liability Management CoE recommends the framework and policies for the independent assessment, measurement and monitoring of liquidity risk and interest rate risk in the banking book. It conducts regular stress testing on the Group’s liquidity and interest rate risk in the banking book profile, by leveraging on the standardised infrastructure it has designed, built and implemented across the region. It provides the framework and tools for maintenance of the early warning system indicators and contingency funding plan by business owners across the Group. • Credit Risk CoE The Credit Risk CoE consists of Retail and Non-Retail credit risk and is dedicated to the assessment, measurement, management, monitoring and reporting of credit risk of the Group. It ensures a homogenous and consistent approach to credit risk policies, methodologies and procedures; credit risk models; underwriting; and portfolio analytics. In ensuring a standardised approach to risk management across our Group, all risk management teams within our Group are required to conform to the Group EWRM framework, subject to necessary adjustments required for local regulations. For branches and subsidiaries without risk management department, all risk management activities are centralised at the relevant Risk CoEs. Otherwise, the risk management activities are performed by the local risk management team with matrix reporting line to the relevant Risk CoEs. Chief Risk Officers i) CRO’s main function is to assess and manage the enterprise risk and liaise with regulators in the respective country/entity under his/her purview; ii) The CRO is supported by the CRO International Offices who oversee the risk management functions of the regional offices e.g. branches and small overseas banking subsidiaries; iii) (b) For countries where a CRO is not present and/or not required, a local Head of Risk Management is appointed to be the overall risk coordinator for that country. Risk Centres of Excellence i) ii) These are specialised teams of risk officers responsible for the active oversight of Group-wide functional risk management and the teams support respective CRO in the various geographies. The Risk CoEs consist of Risk Analytics, Credit Risk Infrastructure, Market Risk, Non-Financial Risk Management (comprising Operational, Shariah, Business Continuity Management, Technology, Outsourcing & Fraud Risk Management), Asset Liability Management, and Credit Risk. • Risk Analytics CoE The Risk Analytics (RA) CoE ensures the Group’s compliance to regulatory requirements prescribed for IRB Approach and facilitates other Risk CoEs in their respective risk management through Internal Capital Adequacy Assessment Process (ICAAP), Risk Appetite and Stress Testing. RA CoE also validates credit risk models and performs non-retail credit risk analytics, asset quality reporting and Single Counterparty Exposure Limit (SCEL) regulatory reporting. • Credit Risk Infrastructure CoE The Credit Risk Infrastructure (CRI) CoE implements risk infrastructure of loan decision engine and rating system which encompass credit risk models and lending criteria. The CoE also manages a Risk Data Mart that facilitates Credit Risk, Risk Weighted Asset (RWA) and SCEL reporting and analytics. • Market Risk CoE The Market Risk CoE recommends the framework and policies for independent assessment, measurement and monitoring of market risk. This is operationalised through review of treasury positions versus limits, performing mark-to-market valuation, calculating Value at Risk and market risk capital, as well as performing stress testing. 132
135. K E Y A R E A S O F R I S K M A N AG E M E N T 1 . CREDIT RISK Credit risk is defined as the possibility of losses due to an obligor, market counterparty or an issuer of securities or other instruments held, failing to perform its contractual obligations to the Group. Credit risk is inherent in banking activities and arises from traditional financing activities through conventional loans, financing facilities, trade finance, as well as commitments to support clients’ obligations to third parties, e.g. guarantees. In derivatives, sales and trading activities, credit risk arises from the possibility that our Group’s counterparties will be unable or unwilling to fulfil their obligation on transactions on or before settlement dates. Credit Risk Management Without effective credit risk management, the impact of the potential losses can be overwhelming. The purpose of credit risk management is to keep credit risk exposure to an acceptable level vis-à-vis the capital, and to ensure the returns commensurate with risks. Consistent with the three lines of defence model on risk management where risks are managed from the point of risk-taking activities, our Group implemented the risk-based delegated authority framework. This promotes clarity of risk accountability whereby the business unit, being the first line of defence, manages risk in a proactive manner with Group Risk as a function independent from the business units as the second line of defence. This enhances the collaboration between Group Risk and the business units. The risk-based delegated authority framework encompasses joint delegated authority, enhanced credit approval process and a clear set of policies and procedures that defines the limits and types of authority designated to the specific individuals. Our Group adopts a multi-tiered credit approving authority spanning from the delegated authorities at business level, joint delegated authorities holders between business units and Group Risk, to the various credit committees. The credit approving committees are set up to enhance the efficiency and effectiveness of the credit oversight as well as the credit approval process for all credit applications originating from the business units. For corporate, commercial loans and private banking loans, credit applications are independently evaluated by the Credit Risk CoE team prior to submission to the joint delegated authority or the relevant committees for approval; certain business units officers are delegated with credit approving authority to approve low valued credit facilities. For retail loans, all credit applications are evaluated and approved by Consumer Credit Operations according to the designated delegated authority with higher limit approved at joint delegated authority and relevant credit committee. The GRCC, with the support of Group Credit Committee, Group Asset Quality Committee, other relevant credit committees as well as Group Risk, is responsible for ensuring adherence to the Board’s approved risk appetite and risk posture. This, amongst others, includes reviewing and analysing of portfolio trends, asset quality, watch-list reporting and reviewing policy. It is also responsible for articulating key credit risks and mitigating controls. Adherence to and compliance with country sector limit, single customer and country and global counterparty limits, are approaches adopted to address concentration risk to any large sector or industry, or to a particular counterparty group or individual. Adherence to the above established credit limits is monitored daily by Group Risk, which combines all exposures for each counterparty or group, including off balance sheet items and potential exposures. For retail products, portfolio limits are monitored monthly by Group Risk. It is our Group policy that all exposures must be rated or scored based on the appropriate internal rating models, where available. Retail exposures are managed on a portfolio basis and the risk rating models are designed to assess the credit worthiness and the likelihood of the obligors to repay their debts, performed by way of statistical analysis from credit bureau and demographic information of the obligors. The risk rating models for non-retail exposures are designed to assess the credit worthiness of the corporations or entities in paying their obligations, derived from both quantitative and qualitative risk factors such as financial history and demographics or company profile. These rating models are developed and implemented to standardise and enhance the credit underwriting and decision-making process for our Group’s retail and non-retail exposures. Credit reviews and ratings are conducted on the non-retail credit exposures at minimum on an annual basis, and more frequently when material information on the obligor or other external factors come to light. The exposures are actively monitored, reviewed on a regular basis and reported regularly to GRCC and Board Risk and Compliance Committee. Asset quality is closely monitored so that deteriorating exposures are identified, analysed and discussed with the relevant business units for appropriate remedial actions, including recovery actions, if required. Credit Risk Mitigation The employment of various credit risk mitigation techniques such as appropriate credit structuring, and posting of collateral and/or third party support form an integral part of credit risk management process. Credit risk mitigants are taken where possible and are considered secondary recourse to the obligor for the credit risk underwritten. 133
136. risk management All extension of secured credit facilities as deemed prudent , must be appropriately and adequately collateralised. A credit proposal is considered secured only when the entire proposal is fully covered by approved collateral/securities within their approved margins as set out in the relevant credit policy guides. Group Credit Committee is empowered to approve any inclusion of new acceptable collaterals/ securities. Recognised collaterals include both financial and physical assets. Financial collaterals consist of mainly cash deposits, quoted shares, unit trusts and debt securities, while physical collateral includes land, buildings and vehicles. Guarantors accepted are in line with BNM’s Capital Adequacy Framework (Basel II – Risk-Weighted Assets) and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets) guidelines. Eligible credit protection is also used to mitigate credit losses in the event that the obligor/counterparty defaults. In mitigating the counterparty credit risks from foreign exchange and derivatives transactions, our Group enters into master agreements that provide for closeout netting with counterparties, whenever possible. A master agreement that governs all transactions between two parties, creates the greater legal certainty that the netting of outstanding obligations can be enforced upon termination of outstanding transactions if an event of default occurs. For each counterparty where credit support annex has been executed in addition to master netting agreement, our Group will request for additional collateral for any exposures above the agreed threshold, in accordance with the terms specified in the relevant credit support annexes. Our Group avoids unwanted credit or market risk concentrations by diversifying our portfolios through a number of measures. Amongst others, there are guidelines in place relating to maximum exposure by products, counterparty, sectors and country. 2. MARKET RISK Market risk is defined as any fluctuation in the value of a trading or investment exposure arising from changes to market risk factors such as interest rates, currency exchange rates, credit spreads, equity prices, commodities prices and their associated volatility. Our Group hedges the exposures to market risk by employing various strategies, including the use of derivative instruments. Our Group adopts various measures as part of risk management process. Our GRCC with the assistance of Group Market Risk Committee and its delegated committees ensure that the risk exposures undertaken by our Group is within the risk appetite approved by our Board. Market Risk CoE is responsible for measuring and controlling our Group’s market risk through robust measurement and market risk limit monitoring while facilitating business growth within a controlled and transparent risk management framework. Market Risk CoE evaluates the market exposures 134 using the applicable market price and pricing model. The valuation process is carried out with the independent price verification requirements to ensure that financial assets/ liabilities are recorded at fair value. The valuation methods and models used are validated by risk management quantitative analysts to assess their applicability relative to market conditions. Our Group also adopts the Value-at-Risk (VAR) methodology as an approach in the measurement of market risk. VAR is a statistical measure of the potential losses that could occur as a result of movements in market rates and prices over a specified time horizon within a given confidence level. Stress testing is conducted to capture the potential market risk exposures from an unexpected market movement. In formulating stress scenarios, consideration is given to various aspects of the market; for example, identification of areas where unexpected losses can occur and areas where historical correlation may no longer hold true. In addition to the above, Market Risk CoE undertakes the monitoring and oversight process at Treasury & Markets trading floors, which include reviewing and analysing treasury trading activities vis-à-vis changes in the financial markets, monitoring limits usage, assessing limits adequacy and verifying transaction prices. 3. LIQUIDITY RISK Liquidity risk is defined as the current and potential risk to earnings, shareholder funds or our reputation arising from our Group’s inability to efficiently meet our present and future (both anticipated and unanticipated) funding needs or regulatory obligations when they are due, which may adversely affect our daily operations and incur unacceptable losses. Liquidity risk arises from mismatches in the timing of cash flows. The objective of our Group’s liquidity risk management is to ensure that our Group can meet its cash obligations in a timely and cost-effective manner. To this end, our Group’s liquidity risk management policy is to maintain high quality and well diversified portfolios of liquid assets and sources of funds under both business-as-usual and stress conditions. Due to its large delivery network and marketing focus, our Group is able to maintain a diversified core deposit base comprising retail transactions accounts, savings, demand and term deposits, thus providing our Group with a stable, large funding base. Our Group maintains some buffers of liquidity throughout the year to ensure safe and sound operations from a strategic, structural and tactical perspective. The day-to-day responsibility for liquidity risk management and control in each individual entity is delegated to the respective Country Asset Liability Management Committee, which subsequently reports to Group Asset Liability Management Committee. The Group Asset Liability Management Committee meets at least once a month to discuss the liquidity risk and funding profile of the Group. The key liquidity risk metrics comprise of internal liquidity gaps or cashflow maturity profile mismatches under business as usual and stress scenarios, regulatory liquidity coverage ratio
137. (“LCR”) and Net Stable Funding Ratio (“NSFR”) which are measured and monitored regularly. LCR is a quantitative regulatory requirement which seeks to ensure that banking institutions hold sufficient high quality liquid assets (“HQLA”) to withstand an acute liquidity stress scenario over a 30-calendar-days horizon. Our Group monitors and reports LCR and NSFR based on the BNM LCR and NSFR Policy Document dated 25 August 2016 and 31 July 2019 respectively. The effective date for NSFR is 1 July 2020. As part of its ordinary course of business, the Bank maintains the LCR and NSFR above the regulatory requirements. In addition, liquidity risk stress testing under various scenarios covering bank-specific (idiosyncratic), market-wide and combined crises is performed regularly to identify sources of potential liquidity strain. In addition to regulatory limits, liquidity risk undertaken by our Group is governed by a set of established liquidity risk limits and appetite. Management Action Triggers (MATs) have been established to alert management to potential and emerging liquidity pressures. Our Group’s Liquidity Risk Management Policy is subjected to periodic review. The assumptions, risk limits and appetite are regularly reviewed in response to regulatory changes, changing business needs and market conditions. The Asset-Liability Management function, which is responsible for the independent monitoring of our Group’s liquidity risk profile, works closely with Treasury and Markets in its surveillance on market conditions. Business units are responsible for establishing and maintaining strong business relations with their respective depositors and key providers of funds. Overseas branches and subsidiaries should seek to be self-sufficient in funding at all times. Treasury and Markets only acts as a global provider of funds on a need-to or contingency basis. Each entity has to prudently manage its liquidity position to meet its daily operating needs. Our Group’s Contingency Funding Plan (CFP) is in place to alert and enable the management to act effectively and efficiently during a liquidity or funding crisis and under adverse market conditions. The CFP is subjected to regular testing. 4. INTEREST RATE RISK IN THE BANKING BOOK Interest rate risk in the banking book is defined as the current and potential risk to our Group’s earnings and economic value arising from movement in interest rates. Our Group manages its exposure of fluctuations in interest rates through policies established by Group Asset Liability Management Committee. Interest rate risk in the banking book undertaken by our Group is governed by an established risk appetite that defines the acceptable level of risk to be assumed by our Group. The risk appetite is established by the Board. The Group Asset Liability Management Committee is a board-delegated committee which reports to the GRCC. With the support from Asset Liability Management CoE under Group Risk, and Capital and Balance Sheet Management under Group Finance, our Group Asset Liability Management Committee is responsible for the review and monitoring of Group’s balance sheet, business and hedging strategies, the overall interest rate risk profile and ensuring that such risk profile is within the established risk appetite. Treasury & Markets is responsible for day-to-day management of exposure and gapping activities, including execution of hedging strategies. Interest rate risk in the banking book is measured by: (i) Economic Value of Equity (EVE) sensitivity measures the long term impact of sudden interest rate movement across the full maturity spectrum of our Group’s assets and liabilities. It defines and quantifies interest rate risk as the change in the economic value of equity (e.g. present value of potential future earnings and capital) as asset portfolio values and liability portfolio values would rise and fall with changes in interest rates. This measure helps the Group to quantify the risk and impact on capital with the focus on current banking book positions. (ii) Earnings At Risk (EAR) is the potential impact of interest rate changes on the bank’s accruing or reported earnings. It focuses on risk-to-earnings in the near term, typically the next one year. Fluctuations in interest rates rate generally affect reported earnings through changes in the bank’s net interest income, which is the difference between total interest income earned from assets and total interest expense incurred from liabilities. Our Group’s EAR is taking into consideration forecasts on budgeted new business generation and product pricing strategies. 5. NON-FINANCIAL RISK MANAGEMENT OVERSIGHT Operational risk managed under Group Non-Financial Risk Management is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It includes legal risk but excludes strategic and reputation risks. Operational Risk Management Oversight The NFRM CoE, a second line of defence function, provides the methodology, tools and processes for the identification, assessment, reporting, and management of operational risks by the respective risk owners across the Group. The NFRM CoE also independently oversees the operational risk controls monitoring that reside within the first line of defence. Identified risks are rated using a defined risk rating methodology applied across the Group’s three lines of defence. Monitoring of the identified risks is primarily done through the Group Operational & Resiliency Risk Committee (GORRC) or relevant risk management committees operating in each material geography and business line. These committees report up to the relevant functional or country level committees. The GORRC is the senior management committee at the Group-level that is tasked to oversee the operational risk framework and policies to ensure they are appropriate for the size and complexity of the current and future operations of CIMB Group and make recommendation to the GRCC for approval. GORRC oversees and monitors the overall control environment of CIMB Group and reports to Group Risk and Compliance Committee (GRCC) on material operational risks. 135
138. risk management Shariah regulatory authorities of the jurisdictions in which the Group operates . SNC may result in financial and non-financial impact to the Group such as nullification of contract, nonrecognition of income or earnings, regulatory breach, reputation risk, etc. Non-Financial Risk Management Approach CIMB Group recognises that the key determinant for a well-managed banking operation is to cultivate an organisation-wide risk management discipline and culture. Our Group manages operational risks through the following key measures: • Sound risk management practices in accordance with Basel regulatory guidelines; The appropriate treatment of any SNC income or earnings shall be advised by the BSC, which may include but is not limited to, channelling the SNC income or earnings to charitable organisation or returning the SNC income or earnings to customers. Our Group has a Group Shariah Advisory & Board Shariah Committee Secretariat Policy in place, which governs the roles and responsibilities of BSC, overall Shariah compliance functions and Shariah governance processes of CIMB Group. Monitoring of Shariah compliance and Shariah governance is carried out through Shariah Review and Shariah Audit functions, supported by SRM control measures and Shariah & Governance. SRM is facilitated by the SRM unit within NFRM CoE by implementing a systematic and consistent approach to the management of SNC. The objectives, mission, guiding principles, governance structure, as well as the methodology and approach adopted by the Group in managing SNC risk, are articulated in the Shariah Risk Management Policy (SRMP). Apart from monitoring and analysing the SNC events or incidences submitted by Risk Control Officer/Designated Compliance and Operational Risk Officers to Shariah Review & Assurance under Group Legal and Compliance CoE for escalation to BSC and reporting to the relevant risk committees, SRM unit within NFRM CoE also actively participates in the Islamic products and services development process to ensure that all SNC risk are appropriately identified, assessed, managed and controlled. The new products and services as well as internal policies and procedures that are applicable to Islamic banking businesses and services are subject to prior approval from BSC before implementation. 8. SUSTAINABILITY RISK The Sustainability Risk Management Framework enables us to identify, access, govern, manage and monitor economic, environmental, social and ethical risks through appropriate policies, procedures and controls. Underpinning the Sustainability Risk Management Framework are the Group Sustainability Policy (GSP) and the Group Sustainable Financing Policy which guide the Group’s orientation and performance to sustainability. These include, among others, conduct of sustainability due diligence to evaluate, adopt and advocate proactive measures to manage sustainability risks arising from the Group’s lending and business activities. For more information about the governance and implementation of the two policies, to refer to the Sustainability Statement of this Annual Report or the CIMB Group Sustainability Report 2019. • Board and senior management oversight; • Well-defined responsibilities for all personnel concerned; • Establishment of a risk management culture; • Deployment of Operational Risk Management (ORM) tools that include: – Operational Event and Loss Data Management – Risk & Control Self- Assessment – Control Issue Management – Key Risk Indicators; – New Product Approval Process; and – Scenario Analysis These tools form part of the operational risk framework that allows the Group to effectively identify, measure, mitigate and report its operational risks. Each material division of the CIMB Group self-assesses on their internal risk and control environment rating and report key control deficiencies with remediation plans. Each new or varied product with changes to the process flow is subjected to a rigorous risk review, where all critical and relevant areas of risk are being appropriately identified and assessed independently from the risk takers or product owners. The promotion of a risk management culture within our Group, whereby the demand for integrity and honesty is nonnegotiable, remains the core theme in our operational risk awareness programme. Additionally, the e-learning module on operational risk management has enhanced the awareness of operational risk amongst the staff. 6. REPUTATION RISK Reputation risk is defined as current or prospective risk to earnings and capital arising from the adverse perception by the stakeholders about the Group’s business practices, conduct or financial condition. Such adverse perception, whether true or not, may impair public confidence in the Group, result in costly litigation, or lead to a decline in its customer base, business, revenue or share price. Reputation risk exists throughout the organisation and is essentially a function of the adequacy of the Group’s internal risk management processes, as well as the manner and efficiency with which management responds to external influences. The framework for managing reputational risk identifies the sources of reputational risks, and monitors and manages these within a defined risk appetite. The Group Operational & Resiliency Risk Committee provides oversight over the framework execution. 7. SHARIAH NON-COMPLIANCE RISK 136 SNC risk is the risk that arises from the Group’s possible failure to comply with the Shariah requirements determined by SAC of BNM and SC, BSC of CIMB Group and the other Sustainability risk refers to environmental and social issues stemming from transactions/activities associated with a business relation and its operations and/or the Group’s own internal operations and employees. It also includes the risks or opportunities that the Group may be exposed to, or that may be available to the Group, because of changing social and environmental conditions.
139. audit committee OVERVIEW The Audit Committee of CIMB Group Holdings Berhad (Group AC) is committed to its role of ensuring high corporate governance practices and providing oversight on the Group’s financial reporting, risk management and internal control systems. 1.   AT T E N DA N C E O F M E E T I N G S The details of the Group AC membership and meetings held in 2019 are as follows: Name of Committee Member Number of Committee Meetings Status Held Attended Dato’ Mohamed Ross bin Mohd Din Chairman/ Independent Director 17 17 Datuk Mohd Nasir Ahmad Independent Director 17 16 Ms Teoh Su Yin Independent Director 17 13 In addition to the 17 meetings held to deliberate on matters relating to the Group, 26 other meetings were held by members of the Banking Group Audit Committee (Banking Group AC) to deliberate on matters relating to the three Malaysian banking entities, making a total of 43 meetings for the year. Deliberations at the AC meetings were robust and detailed, generally lasting for a few hours. Minutes of the AC meetings held were provided to members of the respective Boards. The Board would be briefed on the significant matters deliberated during the AC meetings. 2 .   AU T H O R I T Y The AC is a Board delegated committee. In discharging its duties, the AC has explicit authority to investigate any matter within its terms of reference. It has full access to and co-operation from Management and full discretion to invite any Director or Executive Officer to attend its meetings. The AC shall have the necessary resources from the Group to discharge its functions effectively. The AC has full and unrestricted access to information and is able to obtain independent professional advice if necessary, with any expenses related thereto to be borne by the Group. 3 .   S U M M A RY O F AC T I V I T I E S I N 2 0 19 INTERNAL AND EXTERNAL AUDIT PROCESS a. Approved the annual internal audit plan and the mid-year review of the plan in March and August 2019 respectively. Reviewed the audit plan for Business Units based on risk assessment conducted and audit resource requirements. b. Reviewed GCAD’s revised methodology and practices in respect of risk assessment for audit planning purposes and audit grading. c. Approved the KPIs for GCIA and his direct reports and evaluated the GCIA’s annual performance together with the remuneration payout. d. Evaluated GCAD’s overall performance for 2019 and provided written feedback for improvements. e. Reviewed the summary of internal audit work performed across the region together with the audit outcome on a quarterly basis. f. Reviewed and approved the External Auditor’s 2020 audit plan and scope of work on 25 September 2019. The details of the Banking Group AC membership and meetings held in 2019 are as follows: Name of Committee Member Number of Committee Meetings Status Held Attended Datuk Mohd Nasir Ahmad Chairman/ Independent Director 26 26 Dato’ Zainal Abidin Putih NonIndependent Director 26 24 Puan Rosnah Dato’ Kamarul Zaman Independent Director 26 25 Puan Nadzirah Abd Rashid Independent Director 26 26 Madam Ho Yuet Mee Independent Director 26 22 137
140. audit committee report g . Held a closing meeting of external audits with the External Auditor to review the financial results, MFRS related issues, credit related matters, valuation of project investment, group and tax related matters and areas of concerns identified. h. Held 2 meetings with the External Auditor without the presence of the Group Management and Executive Directors on 25 January 2019 and 24 July 2019 to discuss relevant issues and obtain feedback for improvements. i. Reviewed and recommended for Board’s approval the audit fees and provision of non-audit services by the External Auditor in accordance with established procedures; evaluated whether such non-audit services would impair the External Auditor’s independence and objectivity. j. Completed the annual assessment on the External Auditor in November 2019 prior to recommendation to the Board on its reappointment; the principal areas assessed were in accordance to BNM’s Guidelines on External Auditor covering performance, independence and objectivity. Accordingly, the areas assessed included: f. Reviewed the internal control issues identified by internal, external and regulatory auditors, Management’s response to audit recommendations and the implementation of agreed action plans. For audits with adverse audit ratings and audit areas deemed to be critical, AC engages with Management more actively to resolve any control weaknesses identified. g. Monitored the implementation of corrective actions by Management; Management need to provide justifications for any undue delay and present for AC’s approval. h. Held meetings with the respective ACs and Management of CIMB Niaga, CIMB Thai, CIMB Cambodia, CIMB Vietnam and Touch ‘n Go. In each of the meetings, the businesses and issues of the respective operations were presented and discussed. i. Attended the Group’s Annual Management Summit where relevant businesses and support units reviewed their operations for the year and presented strategies and plans for the coming year. j. AC Chairman of CIMB Group provided oversight on the effective implementation of the CIMB Group Policy on whistle blowing pursuant to BNM Corporate Governance Framework; any concerns on illegal, unethical or questionable practices escalated to the AC Chairman via the dedicated whistle blowing email address objectively investigated and addressed. • Level of knowledge, capabilities experience and quality of previous work • Level of engagement with the ACs • Ability to provide constructive observations and recommendations • Appropriateness of audit approach and the effectiveness of audit planning • Timeliness of audit deliverables AUDIT ISSUES RESOLUTION COMMITTEE (AIRCOM) a. AIRCom, an AC delegated committee, assisted the AC in ensuring the effectiveness of management actions in addressing key risks and internal control weaknesses. The appointment of AIRCom Chairman and Alternate Chairman (held by Senior Management) require the AC’s approval. b. The AIRCom’s key activities include: • Non-audit services rendered by the External Auditor so that it does not impede their independence k. On track in achieving the requirement on Certification of Banking Auditors (CBA) as imposed by Asian Institute of Chartered Bankers (AICB). GOVERNANCE, RISK AND CONTROL a. Reviewed the adequacy and effectiveness of the Group’s system of internal controls, financial reporting and risk management (based on audit plan coverage). b. Endorsed GCAD’s enhanced methodology for identifying, assessing and covering risk areas. c. Reviewed the Group’s compliance with regulatory requirements and internal policies (based on audit plan coverage). d. Encouraged robust discussion on emerging risks, key challenges and operational concerns, including requiring Management to present their strategies and action plans in achieving established objectives. e. Reviewed the efficiency of GCAD’s operations and the economical utilisation of its resources. 138 • Reviewed significant findings arising from audits and investigations conducted; where necessary, the relevant responsible party would attend AIRCom to discuss the issues and effectiveness of corrective actions taken. • Reviewed findings to identify common themes and holistic solutions to address the root cause(s). • Reviewed reasons for any delayed implementation of agreed action plans and to escalate to higher authority where required; to provide recommendation for AC’s approval for cases with repeated extension of implementation date (the process of revising target implementation date is governed by an established Audit Follow-Up Framework). • Assess any decision by risk owners to accept the risk exposure of audit findings (i.e to not take corrective actions, based upon the risk owners’ cost benefit analysis); provide appropriate recommendation for AC’s endorsement of the risk acceptance.
141. c . The AIRCom meetings were held monthly prior to any AC meetings for the month; minutes of the AIRCom meetings were submitted to AC for notification and discussion. FINANCIAL REPORTING a. Reviewed the financial statements of the Group on a quarterly basis and the draft announcements before recommending them for the Board’s approval. b. Reviewed the financial results prior to the approval by the Board; discussed the following as highlighted by the External Auditor in audited financial reports: • Significant accounting and audit matters involving credit, treasury, taxation and impairment related matters • Information technology matters • Group related matters (i.e. impairment of Permata loans & cost of investment in CIMB Investment Bank, assessment of goodwill impairment and intangible assets) c. Pursuant to MFRS 124 on Related Party Disclosures, significant RPT balances and transactions were reviewed on quarterly basis, with explanations provided for exceptional trend or transactions. d. All loans and financing granted to connected parties (pursuant to BNM’s Guidelines on Credit Transactions and Exposures with Connected Parties) are under the direct purview of the respective Board of Directors. 4 .   S U M M A RY O F G CA D ’ S K E Y AC T I V I T I E S a. GCAD’s scope of coverage encompassed all business and support units; areas audited included treasury related matters, loans & financing (retail & non retail), distribution channels, back office operations, IT operations & security, Head Office functions and also special focus areas such as AML/CFT, customer information secrecy, product transparency, outsourced functions and business continuity. b. Developed infrastructure to support GCAD’s strategic emphasis on Data Analytics and Continuous Auditing. c. Identified potential cost savings and prevention of data and income leakage from the audits and investigations performed during the year. d. Monitored and followed up on the implementation of the corrective actions by Management; appropriate validation was performed in accordance with GCAD’s Audit Follow-Up Framework. e. Reported status of outstanding audit findings to AC on a quarterly basis; undue delays in the implementation of agreed action plans were escalated to the relevant authority for further action. f. Acted as secretariat of AIRCom, and prepared minutes of meeting for submission to AC; other activities included preparing of meeting materials and following-up on matters arising. g. Conducted 2 regional town hall for top-down communication on key matters relating to the internal audit function. h. Conducted a two-day Regional Audit Planning Summit held at CAD Niaga, Jakarta to discuss and deliberate key audit methodologies and pressing matters relating to the function. • MFRS 9 related matters which include the review of overall governance framework surrounding MFRS 9 models, post-implementation review (i.e. annual validation) and model monitoring d. In relation to the financial statements for the financial year ended 31 December 2019, the AC at its meeting held on 23 January 2020 was briefed by the External Auditors on the Key Audit Matters included in the Independent External Auditors’ Report. These are matters regarded as most significant by the External Auditors in the audit of the financial statements of the Group and the Company, which involved significant judgement and estimates by the Management. The AC is satisfied that based on the audit procedures performed by the External Auditors, no material exceptions were noted on those matters. Reviewed write-off proposals as presented by the Management before recommending them for the Board’s approval in accordance to established policy. RELATED PARTY TRANSACTIONS (RPTS) AND CONFLICT OF INTEREST a. b. RPTs are reviewed by the AC, taking into account the nature and underlying details of the transactions, in establishing any potential conflict of interest that may arise, before making recommendation to the Board for approval. Pursuant to the Main Market Listing Requirements of Bursa Malaysia, there was one related party contract recommended by the AC for the Board’s approval during the year in relation to the appointment of a related party company providing facilities management services to CIMB for a period of 5 years commencing from 1 January 2020 to 31 December 2024. (Note: In addition to the above reports issued, a number of regulatory driven assignments had also been completed) • Summary of any uncorrected misstatements c. Carried out audits and investigations on the Group; issued 308 reports during the year. 139
142. audit committee report i . Enhanced relationship with Management by implementing Quarterly Business Monitoring (QBM). GCIA, Department Heads or Section Heads have regular meetings with relevant key stakeholder to strengthen the working relationship and business understanding, for better audit focus. j. Reviewed and provided feedback on drafts of new and revised policies of the Group through Group Policy & Procedures Oversight Committee (GPOC). Feedback focused on, but was not limited to, ascertaining the adequacy of policies’ proposed governance and controls to address risks. k. Submitted periodic reports to the AC, top Management and regulators. l. Supported AC in the annual review exercise on appointment of External Auditor. Audit Committee Member Datuk Mohd Nasir Ahmad (continued) • Speaking at Malaysian Economic Convention • ACCA Council Training (June 2019) • “Demystifying The Diversity Conundrum: The Road to Business Excellence" by BURSA Malaysia • 2nd PIDM-FIDE FORUM Annual Dialogue with the CEO of PIDM • Speakers in CIMB INSEAD Leadership Programme (CLP) Cohort 8 Module 3 • 3rd Directors Regional Sharing Session • ACCA Council Training (September 2019) • Speakers in CIMB Young ASEAN Leaders 2019 • Regional Conference on Climate Change • The Cooler Earth Sustainability Summit • Regional Audit Planning Summit • Forum on Corporate Governance in the Capital Market • CIMB Group’s Annual Management Summit • Adequate Procedures Complying with Section 17A of MACC Act 2009 • Sesi Perkongsian Pengetahuan dan Pengalaman untuk SIRIM ‘Talent Management Program’ • Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” by Malaysian Anti-Corruption Commission Dato’ Mohamed Ross Bin Mohd Din • Tech 101 Briefing • Islamic Finance for Board of Directors Programme by International Shariah Research Academy in Islamic Finance • CIMB Tech Risk Workshop • Bank Negara Malaysia – FIDE: Dialogue with the Deputy Governor on the Draft Risk Management in Technology Policy • Bank Negara Malaysia Financial Industry Conference 2019 • FIDE Forum – ISRA Programme – Value Based Intermediation: Directors Role • 3rd Directors Regional Sharing Session • The Cooler Earth Sustainability Summit • Khazanah Megatrends Forum 2019 • CIMB Group’s Annual Management Summit • Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” by Malaysian Anti-Corruption Commission m. Developed a comprehensive Competency Framework for holistic staff development including a training roadmap for continuous upskilling/reskilling our auditors. 46% of auditors currently possess the Certification for Bank Auditor (CBA) qualification by the AICB. n. Continued with the Branch Manager Attachment Program to promote risk and control culture in the first line of defense; of the 17 branch managers participated in 2019. (2018: 20) o. Passed the Surveillance Audit of ISO 9001:2015 Certification for internal audit services. p. Incurred total costs of RM84.5 million (Malaysia: RM41 million) to maintain the internal audit function of the Group for FY2019. 5. TR AINING Listed below are the seminars and training events attended by the members of the Audit Committee to keep abreast of latest developments (listed in chronological order): Audit Committee Member Datuk Mohd Nasir Ahmad 140 Training attended • Tech 101 Briefing • Chairman Media Training • Bank Negara Malaysia Annual Report 2018/ Financial Stability and Payments Systems Report 2018 Briefing Session • CIMB Tech Risk Workshop • Chairman Media Training – Workshop 3 (Speech Delivery) • Bank Negara Malaysia – FIDE: Dialogue with the Deputy Governor on the Draft Risk Management in Technology Policy • CIMB BOD European Innovation Safari Training attended
143. Audit Committee Member Training attended Dato ’ Zainal Abidin Putih • Tech 101 Briefing • BNM Annual Report 2018/Financial Stability and Payment Systems Report 2018 Briefing Session • CIMB – Risk Posture Workshop • 3rd Directors Regional Sharing Session • The Cooler Earth Sustainability Summit • Khazanah Megatrends Forum 2019 • FIDE/ICLIF Programme – Understanding Fintech and Its Implications for Insurance Companies • CIMB Group’s Annual Management Summit • Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” by Malaysian Anti-Corruption Commission • L&G Directors’ in House Training – Leadership Greatness In Turbulent Times – Building Corporate Longevity: by Erik P.M. Vermeulen, Senior Legal Counsel & IDMD Faculty Member Puan Rosnah Dato’ Kamarul Zaman • Tech 101 Briefing • CIMB Tech Risk Workshop • 3rd Directors Regional Sharing Session • The Cooler Earth Sustainability Summit • Leadership Greatness in Turbulence Times – Building Corporate Longevity • CIMB Group’s Annual Management Summit • Islamic Finance for Board of Directors Training Programme • Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” by Malaysian Anti-Corruption Commission Puan Nadzirah Abdul Rashid • CIMB Tech Risk Workshop • Islamic Finance – A Catalyst for Financial Inclusion • CG Watch: How does Malaysia Rank? • MyFintech Week 2019 • 3rd Directors Regional Sharing Session • The Cooler Earth Sustainability Summit • Khazanah Megatrends Forum 2019 • Malaysia: Post Budget 2020 Forum • Leadership Greatness in Turbulence Times – Building Corporate Longevity • CIMB Group’s Annual Management Summit • Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” by Malaysian Anti-Corruption Commission Audit Committee Member Training attended Mdm Ho Yuet Mee • Global Board Leadership Summit • Tech 101 Briefing • Islamic Finance for Board of Directors Programme by International Shariah Research Academy in Islamic Finance • Financial Institutions Directors Education (FIDE) Core Programme – Module B • Digital Assets: Global Trends, Legal Requirements and Opportunities for Financial Institutions • CIMB Tech Risk Workshop • Bank Negara Malaysia – FIDE: Dialogue with the Deputy Governor on the Draft Risk Management in Technology Policy • FIDE Forum – ISRA Programme – Value Based Intermediation: Directors Role • 3rd Directors Regional Sharing Session • FIDE Elective Programme: Raising Defences – Section 17A, MACC Act • 2030 Sustainable Development Goals Game • BNM-FIDE Forum Dialogue: Key Aspects of Fintech and Regulation • The Cooler Earth Sustainability Summit • Khazanah Megatrends Forum 2019 • Leadership Greatness in Turbulence Times – Building Corporate Longevity • Malaysia SDG Summit 2019 • CIMB Group’s Annual Management Summit Teoh Su Yin • Tech 101 Briefing • 3rd Directors Regional Sharing Session • The Cooler Earth Sustainability Summit • Khazanah Megatrends Forum 2019 • Enhancing Corporate Governance by Understanding Legal Liabilities “Act or Resign” by Malaysian Anti-Corruption Commission 141
144. board shariah committee Pursuant to the enterprise wide Shariah governance framework as provided by Bank Negara Malaysia in its Guideline on Shariah Governance for Islamic Financial Institutions and now as enshrined in the effective Islamic Financial Services Act 2013 , the Board of Directors (the “Board’’) is ultimately responsible and accountable for the oversight and management of Shariah matters in the operation of the Group’s Islamic banking and finance activities. In undertaking its duties and responsibilities relating to Shariah, the Board relies on the advice of the Board Shariah Committee of CIMB Group Holdings Berhad that is established under its core Islamic operating entity, CIMB Islamic Bank Berhad (“CIMB Islamic”). The main responsibility of the Board Shariah Committee is to assist the Board in the oversight and management of all Shariah matters relating to the Islamic banking and finance business of the CIMB Group Holdings Berhad. The Board Shariah Committee operates on the authority as delegated and empowered to it by the Board and as attributed to it under relevant financial regulations and legislations. All decisions by the Board on Shariah matters relating to the Islamic banking business of CIMB Group Holding Berhad shall be made based on the decisions, views and opinions of the Board Shariah Committee. If the Board disagrees with any decisions, views, and opinions of the Board Shariah Committee on any Shariah matter, the former shall refer back the matter to the latter for a second or third review before final decision is made. All and any final decision of the Board on Shariah matter shall be made based on the final decisions, views and opinions of the Board Shariah Committee. All decisions of the Board and the Board Shariah Committee on Shariah matters shall at all times be subordinated to the decision of the Shariah Advisory Council of the relevant Malaysian financial regulators and shall take into consideration the relevant authority on Shariah matters in the relevant jurisdiction it is doing business. The Board Shariah Committee shall at all times assist the Board to ensure that the Group’s Islamic banking and finance business does not have elements/activities which are not permissible under Shariah. The members of the Board Shariah Committee are as follows: 1. Professor Dr. Mohammad Hashim Kamali (contract of appointment expired on 13 June 2019) 2. Dr. Nedham Yaqoobi 3. Dr. Shafaai Musa 4. Professor Dr. Yousef Abdullah Al Shubaily 5. Associate Professor Dr. Aishath Muneeza 6. Ahmed Baqar Rehman (appointed on 1 June 2019) 7. Dr. Ahmad Sufian Che Abdullah (appointed on 1 November 2019) The Board hereby affirms based on advice of the Board Shariah Committee that the Group’s Islamic banking and finance operations has been done in a manner that does not contradict with Shariah save and except for those that have been specifically disclosed in this financial report (if any). This affirmation by the Board is independently verified and confirmed by the Board Shariah Committee in a separate Board Shariah Committee Report made herein. 142 Z A K AT O B L I G AT I O N S CIMB Islamic Bank Berhad pays business zakat by adopting the Adjusted Growth Method to state zakat authorities in line with the methodology approved by Board Shariah Committee. However, the amount payable by the CIMB Islamic Bank Berhad is at the discretion of the management of CIMB Islamic Bank Berhad and it is the shareholder's responsibility to ensure that their own zakat obligation are fulfilled in relation to their ownership of the share. For the Group’s banking and asset management subsidiaries, the obligation and responsibility for payment of zakat on deposits and investments received from their customers lies with their respective Muslim customers only. The aforesaid is subject to the jurisdictional requirements on zakat payment as may be applicable from time to time on the Bank and its subsidiaries arising from changes to local legislation, regulation, law or market convention as the case may be. Accrual of zakat expenses (if any) in the Financial Statements of the Group is reflective of this. B OA R D S H A R I A H C O M M I T T E E ’ S R E P O R T In the name of Allah, the Most Beneficent, the Most Merciful. We, the members of the CIMB Group Board Shariah Committee as established under CIMB Islamic Bank Berhad (“CIMB Islamic”), are responsible to assist the Board in the oversight and management of Shariah matters in the operation of the Group’s Islamic banking and finance activities. Although the Board is ultimately responsible and accountable for all Shariah matters under the Group, the Board relies on our independent advice on the same. Our main responsibility and accountability is to assist the Board in ensuring that the Group’s Islamic banking and finance businesses does not have elements/activities which are not permissible under Shariah. In undertaking our duties we shall follow and adhere to the decisions, views and opinions of the Shariah Advisory Council of the relevant Malaysian financial regulators for businesses undertaken in Malaysia and for businesses outside Malaysia we shall take into consideration the decisions, views and opinions of the relevant authority on Shariah matters (if any, sanctioned by law/ regulation to be followed by the Bank) in the relevant jurisdiction that the Group is doing business.
145. As members of the Board Shariah Committee , we are responsible to provide an independent assessment and confirmation in this financial report that the operations of the Islamic banking and finance business of CIMB Group have been done in conformity with Shariah as has been decided and opined by us and with those Notices, Rules, Standards, Guidelines and Frameworks on Shariah matters as announced and implemented by relevant financial regulators in the relevant jurisdictions that the Group’s Islamic banking and finance businesses were undertaken during the period being reported. Our independent assessment and confirmation has been used as the basis for the Board’s affirmation of the same in the Director’s Report herein before. In making our independent assessment and confirmation, we have always recognised the importance of CIMB Group maintaining and reinforcing the highest possible standards of conduct in all of its actions, including the preparation and dissemination of statements presenting fairly the Shariah compliant status of its Islamic banking and finance businesses. In this regard sufficient internal controls are in place to ensure that any new Islamic financial transaction is properly authorised; the group’s assets and liabilities under its statements of financial position are safeguarded against possible Shariah non-compliance; and, that the day to day conduct of its operations does not contradict Shariah principles. In addition to the necessary policies and procedures, the Bank has a well-defined division of responsibility and guidelines of business conduct to all staff. Effective Shariah governance is supported by a professional staff of Shariah researchers as well as the advisory and consultancy function that supports us in our decision and deliberations, providing check and balance for all Shariah matters as presented to us by the Management. CIMB Group Shariah Review Policy and Procedures were established to set out policies for Shariah review function encompassing regular examination and evaluation of the Bank’s level of compliance to the Shariah requirements, remedial rectification measures to resolve non-compliances and control mechanisms to avoid recurrences. In addition, the Shariah Review Procedures sets out the procedures for Shariah review execution, responsibilities of stakeholders and internal reporting process relating to Shariah non-compliance events, in line with BNM’s requirements. In ensuring that the activities and operations of CIMB Group are Shariah-compliant, Shariah Review conducts post review of CIMB Group’s activities and operations in accordance with the annual Shariah review work plan approved by us and the respective Boards of Directors of CIMB Group. Additionally, Shariah Review conducts investigations on issues escalated by the stakeholders and performs ad-hoc review as required from time to time by us and the regulators. As for effective risk management and control, the Group adopted the strategic implementation of tiered model i.e. Three Lines of Risk Defense in governing and managing Shariah Non-Compliant risk. Lastly, there is also a team of internal auditors who conduct periodic Shariah audits of all the Group’s Islamic banking and finance operations on a scheduled and periodic basis. All in all, the Management of the Group is responsible and accountable to the Board to ensure that the Islamic banking and finance businesses of CIMB Group are done in accordance with the requirement of Shariah. It is our responsibility to form an independent opinion of the state of Shariah compliancy of the business and its operations and advise the Board accordingly. Based on the internal controls that have been put in place by the Management, in our opinion, to the best of our knowledge, the Group has complied with the Shariah rulings issued by the Shariah Advisory Council of Bank Negara Malaysia and by all other financial regulators (where relevant), as well as Shariah decisions made by us (excluding PT Bank CIMB Niaga Tbk) except for the following incident of Shariah non-compliance event within the Group: i) Shariah Non Compliance reward was offered to CIMB Islamic customers pursuant to a marketing campaign. In our opinion: 1. The contracts, transactions and dealings entered into by the Group during the financial year ended 31 December 2018 that were presented to us were done in compliance with Shariah; 2. The allocation of profit and charging of losses relating to investment accounts conformed to the basis that were approved by us in accordance with Shariah; 3. There were no earnings that were realised from sources or by means prohibited by Shariah have been considered for disposal to charitable causes; and 4. The zakat calculation is in compliance with Shariah principles. We have actively monitored and overseen the independent work carried out for Shariah review and Shariah audit functions by the relevant functionaries under the established system of internal control, which included the examination, on a test basis, of each type of transaction, of relevant documentation and procedures adopted by the Group. We are satisfied that the Management has planned and performed the necessary review and audit so as to obtain all the information and explanations which are considered necessary to provide us with sufficient evidence to give reasonable assurance that the Group has not violated Shariah. We, the members of the Board Shariah Committee, are of the opinion that the operations of the Group for the financial year ended 31 December 2019 were conducted in conformity with Shariah except for what has been disclosed. On behalf of the Board Shariah Committee Dr. Shafaai Musa Chairman Associate Professor Dr. Aishath Muneeza Member Kuala Lumpur 1 March 2020 143
146. sustainability For details and comprehensive information , please refer to the full version of the CIMB Sustainability Report 2019 FORWARD: ASEAN’S SUSTAINABLE BANKING AGENDA BEYOND STANDARDS: AN ACCURATE ACCOUNT TO STAKEHOLDERS #CIMBforTomorrow is our commitment to stakeholders. It is about our efforts to preserve invaluable natural and social capital. It is also our endeavour to create value for all stakeholders through net positive economic, environmental and social (EES) impact. Beyond standards, our intent has been to provide stakeholders with accurate and reliable information on our sustainability performance and aspirations. Our motivation is to inspire sustainable action, forge new partnerships for sustainable development, and create a community of sustainability champions. The Sustainability Report 2019 adheres to the following best practice sustainability guidelines, standards and frameworks. In the conduct of business, we assume full responsibility for our actions. 2019 was year one of our first 5-year Sustainability Roadmap. It was a year for us to build the right foundation to anchor our five sustainability pillars or focus areas. CIMB's near-term objectives have been to raise awareness, build capability, garner support from our network of stakeholders, and motivate action. The successful outcomes of these objectives significantly contribute to CIMB's EES performance. In the mid to long-term, the aspiration is to influence, shape and FORWARD the sustainability agenda in ASEAN. Bursa Malaysia’s Main Market Listing Requirements on Sustainability Reporting. “In Accordance” with GRI Standards: Core Option. United Nations Environment Programme Finance Initiative Principles for Responsible Banking (UNEP FI PRB). Dow Jones Sustainability Index (DJSI). BUSINESS CASE: PROFITS WITH PURPOSE SCOPE: REPORTING COVERAGE AND PRINCIPLES This year’s sustainability report focuses on the business case for sustainability. It is a transparent account of stakeholders’ expectations and our commitments. It serves as a credible reference document on the adoption and implementation of sustainability principles, and draws a clear picture of where CIMB is in its sustainability journey. The 2019 scope for our annually published CIMB Sustainability Report includes information for the period 1 January 2019 to 31 December 2019, primarily for Malaysia unless Indonesia, Singapore, Thailand, and Cambodia are indicated. This statement is a summary of the full report. The CIMB Group Sustainability Report 2019 documents an important shift in the way we approach business. From shareholder returns to stakeholder expectations – we are shifting in our mindsets. We are committing to create value for all. We are working to mobilise definitive action today, to create a better tomorrow for everyone who is associated with us. All quantitative and qualitative information for relevant indicators has been disclosed for a minimum of two years where applicable. The last report was published in March 2019 for the period covering 1 January 2018 to 31 December 2018. Where possible, we have remained true to the principles of balance, comparability, clarity, completeness, reliability and accuracy. F E E D B AC K L O O P S : R E V I E W F O R C O N T I N U O U S I M P R OV E M E N T We look at sustainability as our responsibility towards our stakeholders and their future. It is therefore critical to continuously map their views on our sustainability efforts. It is equally important to seek their participation in creating long-term positive impact in areas that matter most to them. Our assurance to our stakeholders is to keep their interests at the core of everything that we do. The motivation is to shape a better tomorrow for all of us. We encourge our stakeholders to access and read our full CIMB Sustainability Report 2019 and submit feedback, ideas, and questions on our programmes and performance. Please contact: Luanne Sieh Head, Group Sustainability sustainability@cimb.com 144 CIMB Sustainability Report 2019 https://www.cimb.com/en/ sustainability/sustainability.html
147. RELIABILITY : ASSURANCE OF THE QUALITY OF REPORTING We continuously discuss and deliberate on the level of transparency and accountability in reporting across various functions of the Group. This positively contributes to improving the quality of our report, in terms of presenting information in a balanced, meaningful and accurate manner. Selected reported information for topics material to CIMB are subject to a limited independent assurance by KPMG. For scope of work and observations, please refer to the full assurance statement on pages 146 - 148 of the Sustainability Report 2019. STAKEHOLDER INCLUSIVENESS: STAKEHOLDERS’ EXPECTATIONS AND MATERIALITY We have committed to use our relationships to influence our ASEAN-wide network of stakeholders to adopt and integrate sustainable business practices. The stakeholders’ influence on our business, interactions, reputation; Our basis for selecting the most critical stakeholders considers three factors The degree or level of our dependency on various stakeholders on our business; and The stakeholders who share common business and community interests and aspirations, or their representativeness. Stakeholder Engagement Process Engage various stakeholder groups through focus groups, oneon-one interviews and online surveys to understand specific sustainability issues relevant to them, and identify topics of interest to stakeholders. Source stakeholder data from multiple internal sources and stakeholder touchpoints, including bank branches, surveys, townhalls, review meetings, briefing sessions etc. Seek stakeholder feedback every three to five years via focus groups, in-depth interviews, and surveys. In 2019, we updated the topics of interests through an assessment of stakeholders' expectations from various internal touchpoints and feedback loops. These however remain aligned to our material topics. Review our current portfolio and sectoral focus to better understand our ability to create direct and indirect impact, both by way of reducing negative impact and creating positive impact. 145
148. sustainability statement In the table below , we have listed our most critical stakeholders, the various platforms we rely on to bridge and strengthen our relationships and some of the key topics that interest our stakeholders. Stakeholders' Topics of Interest Topics of Interest Customers Basis for Selection • Dependency • Influence Banking distribution channels Call centres Social media Feedback forms and surveys Seminars & conferences Frequency of Engagement – Daily Clients Banking distribution channels Call centres Seminars & conferences (Quarterly) Meetings Townhalls Informal meetings Department meetings Feedback surveys Community events Intranet/Newsletter/ Internal Communications Complaints and feedback mechanism in offices Focus groups Frequency of Engagement – Daily 146 • Access to Finance • Favourable Lending Terms • Customer Experience Frequency of Engagement – Daily Employees Basis for Selection • Dependency • Influence Material Topics: Customer Experience; Technology; Financial Literacy, Inclusion, and Well-being; Sustainability Education and Participation. Material Topics: Sustainable Finance; Customer Experience Corporate/Commercial Basis for Selection • Dependency • Impact • Consistent and Superior Customer Experience • Enhanced Digital Services • Financial Education • Financial Inclusion • Green Education and Participation • Data Security • Access to Finance • Leadership by Example - Corporate Values and Culture • Fair Remuneration and Benefits • Grievance Mechanisms • Financial Literacy • Talent Development and Talent Mobility • Sustainability Material Topics: Nurturing Growth; Talent Attraction, Growth, and Retention; Corporate Culture; Diversity and Inclusion; Corporate Citizenship and Volunteerism; Sustainable Finance; Health, Safety and Well-being
149. Procurement process Community events Performance evaluation Focus groups Suppliers Basis for Selection • Dependency Frequency of Engagement – Monthly Government and Regulators Meetings Seminars Basis for Selection • Dependency • Influence Other forms of communication Interviews Frequency of Engagement – Quarterly Community/NGOs/ Civil Society Basis for Selection • Dependency • Influence Community partnerships and investments, including donations Social media (Ongoing) Focus groups Frequency of Engagement – Monthly Partnerships for Growth Fair Remuneration and Payment Terms Grievance Mechanisms Financial Literacy Community Development Material Topics: Sustainable Supply Chain; Governance; Sustainability Education and Participation; Nurturing Growth • • • • • • • • • • • Governance Sustainable Finance Sustainable Supply Chain Sustainability Education and Awareness Financial Inclusion Quality EES Reporting / Communication Value-based Intermediation Customer Experience Treating Customers Fairly Talent Development Climate Change Material Topics: Governance; Customer Experience; Technology; Financial Literacy, Inclusion, and Well-being; Sustainability Education and Participation; Financial Literacy, Inclusion, and Well-being; Sustainability Education and Participation; Climate Change; Sustainable Finance; Sustainable Supply Chain • • • • • • Partnerships for Growth Financial Inclusion Volunteerism Financial Literacy Community Development Climate Change Material Topics: Financial Literacy, Inclusion, and Well-being; Climate Change; Corporate Citizenship and Volunteerism; Nurturing Growth • • • • Investors Basis for Selection • Influence • • • • • Briefings Meetings Frequency of Engagement – Quarterly, Annual Quality EES Reporting / Communication Sustainable Finance Sustainable Supply Chain Practices Governance (Corporate and Sustainability Governance) • Climate Change Strategy Material Topics: Sustainable Finance; Governance; Sustainable Supply Chain; Climate Change 147
150. sustainability statement Materiality & Prioritisation Based on the in-depth stakeholder engagement and materiality assessment exercise undertaken in 2018, below is our Materiality Matrix. These material topics have been finalised based on their expected impact, either through our operations, clients or other business relations. To further prioritise and address the material topics strategically, we have evaluated them based on the following: • The material relevance to stakeholders • Influence on stakeholders’ assessments and decisions • The significance of CIMB’s economic, environmental, and social impacts High Highly Material Issues Importance to Stakeholders Customer experience Governance Sustainable finance Technology Economic Environmental Nurturing growth Social Talent attraction, growth & retention Corporate culture Governance Financial literacy, inclusion and well-being Sustainability education & participation Sustainable supply chain Important Matters Health, safety & well-being Diversity & inclusion Corporate citizenship & volunteerism Low Low 148 Climate change (direct footprint) Significance of CIMB’s EES Impacts High List of 6 Highly Material Issues: List of 8 Important Topics: 1 2 3 4 5 6 1 2 3 4 5 6 7 8 Customer Experience Sustainable Finance Technology Governance Nurturing Growth Talent Attraction, Growth and Retention Corporate Culture Financial Literacy, Inclusion and Well-Being Sustainability Education and Participation Sustainable Supply Chain Health, Safety and Well-Being Climate Change (Direct Footprint) Diversity and Inclusion Corporate Citizenship and Volunteerism
151. OUR PHILOSOPHY Our philosophy for business goes beyond short-term profits . With a rich legacy of over four decades, CIMB Group continues to be a progressive financial institution, fulfilling not only the expectations of our stakeholders today, but safeguarding the needs of future generations. Our core business of banking aspires to fulfil the promise of a better future, where economic growth empowers people and businesses, creates new opportunities, and reduces social inequalities. With sustainable banking practices, we operate to achieve growth that is meaningful for everyone who shares this vision. This also means that we acknowledge the impacts of our business as well as our people on the planet as well as society. Our commitment is to operate in a way where we assume accountability and responsibility towards our actions, while minimising negative impacts and creating net positive impact. In short, our promise of a better future inspires us to optimise our capabilities, resources, and influence for creating positive economic, environmental and social impact. OUR BUSINESS CASE At CIMB, we believe that our positive sustainability performance will not only give us strategic advantage and differentiation, but will future-proof our organisation and our people. The driving force behind all sustainability efforts is our business case as follows: Stakeholders’ Expectations on Responsibility Customers’ Trust in the Company and its Offerings ESG Integration for Enterprise and Shareholder Value Employees’ Opting for ESG-compliant Companies Sustainability Leadership in ASEAN 84% of asset owners are pursuing or actively integrating ESG factors in their investment process1 There is a positive correlation between brand relationship and consumer behaviour, where consumers are willing to pay more for sustainable brands. Economic, environmental, social and governance risks and related issues have had a measurable impact on companies’ market value and reputation. About 70% of millennials surveyed would consider staying for a long term if the company has a strong sustainability plan.2 Need for definitive action and leadership to catalyse adoption of ESG principles, policies, and programmes. Sources: 1. Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Investment Management (2018) 2. Fast Company (2019) 149
152. sustainability statement We consider both VALUE and VALUES when embedding sustainability principles into our business model . Value Preservation We endeavour to identify and mitigate environmental and social risks across the bank, including our products and services, customers, business practices, human capital management, and our value chain partners. Moral Responsibility We believe ‘Sustainability’ is the right thing to do and we have a moral responsibility as a corporate citizen. VALUE VALUES Value Creation Fiduciary Obligation & Beyond Our ultimate objective is to both catalyse and create positive impact in terms of profits, people, and our planet, for CIMB as well as our multiple stakeholders in markets and communities where we operate. Beyond corporate responsibility, we have to demonstrate the right leadership through governance at the highest level. Our aspiration towards 2023 is to become a visible ‘shaper’ of sustainability practices in the ASEAN community. Our actions today will determine how the future will look like, and whether the generations of tomorrow will be grateful for the world we leave behind for them. #CIMBforTomorrow is our pledge for the future and to ensure the sustainability of the planet. By reducing our negative environmental and social impacts and increasing our positive impacts, we are committed to create net positive change for our planet, our people, and for progress, ensuring a better tomorrow. The United Nations Our Common Future, also known as the ‘Brundtland Report’, defines sustainability as “…meeting the needs of the present without compromising the ability of future generations to meet their own.” Thank You from Tomorrow video. Follow us on social media #CIMBforTomorrow 150
153. S U S TA I N A B I L I T Y R OA D M A P 2 0 2 3 We broadly focus on two key objectives . The first is to create positive impact and opportunities through our business, operations, relationships and networks. The second is to manage and mitigate negative impacts and risks through partnerships, capacity building, policy influence and action. In alignment with the Group’s business strategy, the Sustainability Roadmap 2023 focuses on five key areas as follows. THE GROUP OUR CLIENTS SOCIETY Sustainable Action Sustainable Business How we embed sustainability principles in all our business operations and processes to reduce our negative impact such as carbon footprint and generate positive impact through our business How we generate profits in a responsible manner, creating net positive impact through the products and services we provide, and by assisting and encouraging our customers and clients on their own sustainability journeys Corporate Social Responsibility How we use a portion of our profits to enhance and contribute towards sustainable long-term positive impacts in the communities around us Governance and Risk How we govern and report sustainability risks at CIMB, including setting targets and tolerance levels, and how we organise and mobilise ourselves for best results Stakeholder Engagement and Advocacy How we champion, engage, build capability and capacity, raise awareness and drive participation for sustainability, both internally and externally MATERIAL MATTERS BY FOCUS AREAS OF OUR SUSTAINABILITY ROADMAP AND THEIR IMPACT (ECONOMIC, ENVIRONMENTAL, SOCIAL & GOVERNANCE) Economic Environmental Social Governance SUSTAINABLE ACTION Climate Change Health, Safety and Well-being Talent Attraction, Growth and Retention Diversity and Inclusion Sustainable Supply Chain Nurturing Growth 151
154. sustainability statement SUSTAINABLE BUSINESS Customer Experience Sustainable Finance Technology Financial Literacy , Inclusion & Well-being GOVERNANCE & RISK CORPORATE SOCIAL RESPONSIBILITY Corporate Citizenship & Volunteerism Governance Corporate Culture STAKEHOLDER ENGAGEMENT & ADVOCACY Sustainability Education and Participation 152
155. P R I O R I T Y S U S TA I N A B L E D E V E LO P M E N T G OA L S ( S D G s ) All our sustainability efforts, programmes and initiatives, performance tracking, and impact reporting in relation to the above focus areas are structured and designed to meet specific targets of the following seven priority SDGs. Indirect Impact Direct Impact O u r F o c u s To w a r d s 2 0 2 3 The following factors were taken into consideration when prioritising SDGs, in alignment with our focus areas and business impact. 04 01 National Priorities Material Topics Government, regulatory and sectoral focus areas and priorities. 03 Client Impact The impact our Commercial and Corporate Clients can potentially have through activities we finance. An aggregate of what is important to both CIMB and its stakeholders. Factors considered to prioritise SDGs 02 Own Impact Scores Our direct impact through our own practices, procurement, hiring, products, individuals, customers and others. 153
156. sustainability statement S U S TA I N A B I L I T Y S C O R E CA R D In consultation with the Group Sustainability Council , we have determined our preliminary indicators of measuring impact for the 5-year Sustainability Roadmap 2023. A comprehensive target-setting exercise based on all the five pillars (below) is currently in progress. Meanwhile, our aspiration is to progressively demonstrate sustainability leadership across ASEAN. Below is the table with preliminary indicators: Sustainable Action • Reduction in GHG emissions for Scope 1 and 2 across CIMB Group (%) • Gender pay gap (across all Job Categories) • Number of suppliers engaged on sustainability topics • Employees who are upskilled/reskilled (%) • Percentage of Digital, Data, Design workforce (%) Sustainable Business • CIMB Financing Clients with Environmental and Social (E&S) Actions Plans (%) • Clients with E&S Action Plans that implemented them (%) • Percentage of book in Sustainable Business (%) • Number of people from underserved communities served (counselling, advisory, training) • Positive Treating Customer Fairly Perception • Net Promoter Score Corporate Social Responsibility • Funds channelled towards high social and environmental impact programmes (%) • Number of employees participating in CSR programmes Governance and Risk • Material issues supported by policy commitments (%) • Improvement in Governance-related scores on Dow Jones Sustainability Index (%) • Female representation on the Board and in Key Management positions (%) Stakeholder Engagement and Advocacy • Number of employees trained/briefed on sustainability issues • Completion of sustainability e-learning (%) 154
157. FIVE FACTORS UNDERPINNING SUSTAINABILITY TARGETS UN SDGs National Goals Sustainability Indices Programme Targets Baseline & Internal Capability Material Issues While we have set internal sustainability targets to guide various functions to deliver positive performance against each of the five pillars of our Sustainability Roadmap 2023, we are in the process of finalising the mid-term targets, which will be published in the 2020 Sustainability Report. The seven UN SDGs prioritised by the Group (as indicated on page 153) and other pivotal SDG indicators will ensure our alignment to global goals and commitment to local impact in markets where we operate. The Government’s Strategic Plan, led by the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC), aims to achieve energy sustainability and wealth creation. The plan has 20 initiatives for the energy sector, 22 initiatives for science, technology and innovation (STI) and 20 specific plans for environment and climate change. We also align ourselves to the 11th Malaysia Plan’s Six Strategic Thrusts that address economic, environmental, social and governance challenges. Thrust 1 Thrust 2 Thrust 3 Thrust 4 Thrust 5 Thrust 6 Enhancing inclusiveness towards an equitable society Improving well-being for all Accelerating human capital development for an advanced nation Pursuing green growth for sustainability and resilience Strengthening infrastructure to support economic expansion Re-engineering economic growth for greater prosperity The top concerns and issues that are material to our stakeholders as well as to CIMB form the basis for determining mid-term strategies and approaches, risks and opportunities and key areas of focus for achieving EES impact. Significant multi-sectoral material issues tracked by global sustainability indices such as DJSI, MSCI, FTSE and WWF are critical to help our customers and leadership to monitor and manage economic, environmental, social and governance impact. Determining the baseline for each indicator and building internal capability to help us measure and achieve our targets. 155
158. sustainability statement SUSTAINABLE ACTION Sustainability is part of our core Forward23 strategy . Sustainable action demonstrated at CIMB speaks of our commitment to creating positive impacts through our day-to-day business. Our key focus is on promoting sustainable practices in our operations and processes group-wide. Over the last one year, we have achieved significant milestones and made commitments to initiate tangible steps towards addressing sustainability challenges facing our organisation, and its stakeholders. At CIMB, we recognise the urgency. Our mid-term strategy on sustainability takes into account how our business (including the supply chain) will continue to be impacted by the global phenomenon of climate change. We also understand the role of our people in championing definitive action to mitigate negative impacts and create positive change within our circles of influence as well as the communities where we operate. The role of people and their mix is also critical for our business performance. According to the Global Diversity Practice, Diversity widens access to the best talent, whereas Inclusion allows organisations to engage with talent effectively. Together, Diversity and Inclusion lead to enhanced innovation, creativity, productivity, reputation, engagement, and results. At CIMB, we do believe that a healthy balance of gender, age, and ethnicity improves decision-making and gives us a business advantage. HOW DO WE MAP SUSTAINABLE ACTION? Material Topics Climate Change Sustainable Supply Chain Diversity and Inclusion Key Considerations Sustainable Development Goals (SDGs) • What represents the highest percentage of our carbon footprint? • What are the projects designed or supported to mitigate the internal effects of climate on the environment and communities who matter to us? • What motivates our people and how do we future-proof our people? • What drives performance and growth for both our employees and the organisation? • What tangible actions can we take to promote diversity and inclusion in our business? Health, Safety and Well-being Talent Attraction, Growth and Retention Relevent Strategic Pivots Nurturing Growth Our People 156 Technology & Data Ventures & Partnerships Sustainability
159. SUSTAINABLE ACTION : PERFORMANCE HIGHLIGHTS 2019 88% 4,434.4 tCO2e Direct (Scope 1) GHG Emissions in Malaysia, Indonesia, Singapore and Thailand (MIST) 73,377.5 tCO2e Energy Indirect (Scope 2) GHG Emissions in MIST Local supplier base (Malaysia) 40% RM945 million Total disbursement to suppliers (Malaysia) 49 Total People with Disabilities (PWDs) Employed (Malaysia, Indonesia & Thailand) 18 Total number of OSH training sessions (Malaysia) 430 Total number of employees trained in OSH (Malaysia) 50 Procurement governance engagement sessions, involving 700 48.6% Female representation on the CIMB Board Female representation in senior management A 25% increase in suppliers registered in our Group Electronic Procurement Systerm (GEPS) (Malaysia) Spends on suppliers having stronger CSR and/or sustainability orientation 11% 43.9% 819 suppliers Employees covered by a trade union or collective bargaining agreement (Malaysia) 11,389 Employees participated in 3D Academy programmes from Malaysia, Indonesia, Singapore, Thailand and Cambodia internal stakeholders and 4 divisions and 42 departments of CIMB RM141 million Total investment in training and development 32% Recipients of CIMB ASEAN Scholarships are pursuing STEM courses in fields such as Engineering, Computer Science, Actuarial Science and Mathematics Male 68.7 Female 72.3 Average training hours per employee 13 Scholars CIMB ASEAN Scholarship 48 New Talent The Complete Banker™ programme 98.9% Average e-learning completion rate 157
160. sustainability statement SUSTAINABLE BUSINESS Business can be a force for good . Key to this is to understand what sustainability means in the context of both business and stakeholders. Aligning business priorities with stakeholders’ expectations is always the starting point. Over the last two years, we have started to take an outside-in orientation on business i.e., from stakeholders’ perspectives. We are also working to reconcile the gaps, and change the way we measure our impact, our success and our stakeholder relationships. Today, we are mindful of how we generate business profits in a responsible manner. Our objective is to create net positive impact through our products and services. In the process, our long-term approach is to inspire and encourage our customers to contribute to sustainable business, by embracing sustainability principles and practices. HOW DO WE MAP SUSTAINABLE BUSINESS? Material Topics Customer Experience Sustainable Finance Technology Key Considerations Sustainable Development Goals (SDGs) • Who are using our products and services and how? • How do our products and services cater to underserved communities? • How do we ensure fair and equitable treatment of our customers? • Which are the sectors that we fund and what is our environmental and social impact along the value chain? • How do we contribute to the greater agenda of financial well-being? • How do we create positive impacts on the environment and communities through our products and services? Financial Literacy, Inclusion & Well-being Relevant Strategic Pivots Customer Centricity 158 Technology & Data Our People Ventures & Partnerships Sustainability
161. SUSTAINABLE BUSINESS : PERFORMANCE HIGHLIGHTS 2019 Net Promoter Score Total number of CIMB Clicks accounts among comparables in MIST - General Retail Banking Malaysia* top 48% RM6.0 million investment in Be$MART financial literacy programme >16,000 Students benefited from Be$MART financial literacy programme over three years RM3.3 million Total number of mobile app users RM2.0 million Malaysia* 18,000 RM2.6 million Indonesia * active users only Afflicted customers who benefited from our Rescheduled/Restructured Loan arrangements and/or Compromised Settlements, easing their financial burden and reducing their risk of default, and maintaining their credit score/worthiness (Malaysia) RM5,698 million New financing to B40 communities SME owners participated in over 700 sessions on diverse topics, including big data, e-commerce, credit management and forex hedging Indonesia 12,917 Be$MART Mobile application launched to promote financial literacy among youth RM1.9 million 804 Micro debtors financed in Indonesia, where 57.8% were women-run businesses RM174.57 million Total loan draw down since 2016 for affordable housing as part of PR1MA end-financing for low-income groups (as at end 2019) >1,000 SMEs benefited from seminars on digitalisation of business 12 Industry Awards for Customer experience and excellence 4 Sector guides introduced on E&S risks 44 Number of clients screened on ESG risks 4 million e-wallet users registered for Touch ‘n Go e-wallet app, a 5,000% increase in 11 months 159
162. sustainability statement CORPORATE SOCIAL RESPONSIBILITY Transformative CSR catalyses meaningful development . For more than a decade, CIMB Foundation has been instrumental in championing causes which matter to the communities where we operate. From financial literacy to gender empowerment, and entrepreneurship to environmental stewardship, we continue to focus our efforts on identifying issues that impede socio-economic development of people who matter to us in all our markets. It is our mission to help communities prosper and positively contribute to shaping a better planet for future generations. HOW DO WE MAP CORPORATE SOCIAL RESPONSIBILITY? Material Topics Corporate Citizenship & Volunteerism Relevant Strategic Pivots Sustainability Key Considerations Sustainable Development Goals (SDGs) • How do we instill new skills that can improve income potential, employability and competitiveness/competencies of employees, youth, women and SMEs? • How do we impart knowledge that can improve health and productivity as well as performance of employees and community members? • How do we provide a springboard for women, youth, SMEs, and seek meaningful participation of our stakeholders including employees, partners, suppliers, and customers in driving projects with socio-economic benefits? CORPORATE SOCIAL RESPONSIBILITY: PERFORMANCE HIGHLIGHTS 2019 1,170 CIMB Volunteers contributed RM17.0 million RM11.1 million RM11.1 million RM6.6 million spend on Natural Disaster & General Donations/Others spend on Education 6,580 hours to support 68 projects, benefiting more than 40,000 community members 40,000 Total number of beneficiaries (CIMB Foundation) spend on Community Development RM45.8 million Total regional CSR spend 160 spend on Sports
163. GOVERNANCE & RISK It is our responsibility to uphold a high standard of corporate governance. Effective corporate governance is pivotal to preserving the banking ecosystem and the economy as a whole. HOW DO WE MAP GOVERNANCE AND RISK? Material Topics Governance Corporate Culture Key Considerations Sustainable Development Goals (SDGs) • Transparency through disclosures • Number of new policies, procedures and frameworks introduced/revised to address material issues • Feedback and grievance mechanisms • Reported cases/issues on material topics GOVERNANCE & RISK: PERFORMANCE HIGHLIGHTS 2019 Dow Jones Sustainability Index (DJSI) Corporate Assessment (2019) 83/100 69/100 Risk & Crisis Management Anti-crime Policy & Measures 63/100 51st Percentile Codes of Business Conduct 33% Active Board members in non-profit social/ environmental organisations Ranking on DJSI 6/6 Highly material issues supported by policy commitments 5/8 Important material topics supported by policies and programmes (up from 19th percentile in 2018) 11% Female representation on the Board 25% Female representation in Key Management 161
164. sustainability statement STAKEHOLDER ENGAGEMENT AND ADVOCACY Systematic engagement is fundamental to understanding stakeholders ’ needs, while advocacy creates consensus and an ecosystem of support and change. While it is critical to analyse, understand and respond to the evolving expectations, needs, and issues of the priority stakeholders, it is equally important to reach-out to our employees, peers, clients, policymakers, regulators, as well as the government to advocate principles and programmes that will positively contribute to greater impact. The primary objective however for all engagement should be to not just raise awareness, but to mobilise support for enabling meaningful actions towards sustainable development. At CIMB, over the past one year, we have invested our resources and time to first raise our level of engagement with internal stakeholders across the Group, mainly to orientate our employees in different functions on sustainability, sustainable finance, and sustainable development. We also extended our engagement efforts to include important stakeholders outside the organisation, initiating dialogue and deliberations with suppliers, clients, regulators, industry associations, government officials and business leaders on catalysing growth with responsibility towards our environment as well as our people. HOW DO WE MAP STAKEHOLDER ENGAGEMENT AND ADVOCACY? Material Topics Key Considerations Sustainable Development Goals (SDGs) Sustainability Education and Participation • Enculturation of internal stakeholders and their sustainability orientation • Sustainability-related engagements with with external stakeholders • Industry and stakeholder outreach, awareness, and advocacy efforts STAKEHOLDER ENGAGEMENT AND ADVOCACY: PERFORMANCE HIGHLIGHTS 2019 2,268 Number of employees trained/briefed on sustainability issues 22 Industry peers and financial institutions engaged on sustainability 189 CIMB Sustainability Champions 162 7 National and international working groups where CIMB is represented
165. regional R E G I O N A L A DV I S O RY D E A L S Lotte Chemical Titan Holding Berhad Divestment of 59 ,584,000 ordinary shares representing 49% of the issued share capital in PT Lotte Chemical Indonesia by Lotte Chemical Titan Holding Berhad to Lotte Chemical Corporation for a cash consideration of USD65,396,955 BlueScope Steel Limited RM125.0 million acquisition by NS BlueScope (Malaysia) Sdn Bhd, a joint venture entity of BlueScope Steel Limited, of the coated coil business of YKGI Holdings Berhad Paramount Corporation Berhad RM38.5 million disposal of Paramount Corporation Berhad’s controlling interests in KDU University College Sdn Bhd, KDU University College (PG) Sdn Bhd and KDU College (PJ) Sdn Bhd Xinghua Port Holdings Limited Compliance Adviser to Xinghua Port Holdings Limited post its listing on the Main Board of the Stock Exchange of Hong Kong Limited REGIONAL EQUIT Y DEALS Sapura Energy Berhad Strategic partnership between Sapura Energy Berhad (“SEB”) and OMV Aktiengesellschaft, through a joint venture company, SEB Upstream Sdn. Bhd. involving:- Federal Land Development Authority FELDA’s RM308.0 million (USD75.0 million) Maybank block trade FELDA’s RM263.8 million (USD63.7 million) Maybank block trade • Issuance of 50% equity interest in SEB Upstream Sdn. Bhd. for a consideration of USD625 million • Repayment of an amount owing of USD350 million to SEB group Khazanah Nasional Berhad Khazanah Nasional Berhad’s RM1.1 billion (USD255.0 million) Tenaga Nasional Berhad block trade AME Elite Consortium Berhad RM166.6 million (USD39.7 million) IPO of AME Elite Consortium Berhad on Main Market Bursa Malaysia Axis Real Estate Investment Trust Axis REIT’s Follow-on Placement with Total Proceeds of RM340.5 million (USD81.5 million) Pantone 356 C Pantone 186 C BLACK 100% Process Colour Dusit Thani Freehold and Leasehold Real Estate Investment Trust THB1.8 billion Dusit Thani Freehold and Leasehold REIT, Rights Offering and Public Offering Aoyuan Healthy Life Group Company Limited HKD737.0 million (USD94.0 million) IPO on the Main Board of the Stock Exchange of Hong Kong BLACK 30% Process Colour BLACK 60% Process Colour BLACK 100% Process Colour 163
166. regional notable deal REGIONAL DEBT DEALS Khazanah Nasional Berhad Establishment of an Islamic Medium Term Notes Programme of up to RM10 .0 billion in nominal value via Danum Capital Berhad USD500.0 million Guaranteed Exchangeable Bonds via Cerah Capital Ltd Penang Port Sdn Bhd RM1.0 billion Islamic Medium Term Notes Programme LLPL Capital Pte Ltd USD775.0 million Guaranteed Project Financing Notes Genting Berhad via its wholly-owned subsidiary Genting RMTN Berhad RM10.0 billion Medium Term Notes Programme CIMB Bank Berhad USD680.0 million Formosa Sustainable Development Goals Bond LMIRT Capital Pte. Ltd. USD250.0 million Guaranteed Senior Notes RCE Marketing Sdn Bhd via Zamarad Assets Berhad RM2.0 billion Asset-Backed Securitisation Sukuk Programme Kuala Lumpur Kepong Bhd RM2.0 billion Islamic Medium Term Notes Programme YTL Corporation Berhad RM500.0 million Medium Term Notes PT Sarana Multi Infrastruktur (Persero) IDR1,000.0 billion Mudharabah Sukuk via 1st Shelf Registration Programme Tranche II of IDR3,000.0 billion IDR3,000.0 billion Senior Bonds via 2nd Shelf Registration Programme Tranche I of IDR25,000.0 billion Top Glove Corporation Bhd USD200.0 million Guaranteed Exchangeable Bonds via Top Glove Labuan Ltd IDR4,096.0 billion Senior Bonds via 2nd Shelf Registration Programme Tranche II of IDR25,000.0 billion and IDR1,000.0 billion Mudharabah Sukuk via 1st Shelf Registration Programme Tranche III of IDR3,000.0 billion IDR2,808.3 billion Senior Bonds via 2nd Shelf Registration Programme Tranche III of IDR25,000.0 billion YNH Property Bhd RM750.0 million Perpetual Securities Programme Sungai Harmoni Sdn Bhd via Starbright Capital Berhad Issuance of Asset-Backed Medium Term Notes of RM665.0 million in nominal value PT Sarana Multigriya Finansial (Persero) IDR2,511.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche VIII of IDR12,000.0 billion IDR1,850.5 billion Senior Bonds via 4th Shelf Registration Programme Tranche VII of IDR12,000.0 billion IDR2,000.0 billion Senior Bonds via 5th Shelf Registration Programme Tranche I of IDR19,000.0 billion and IDR100.0 billion Mudharabah Sukuk via 1st Shelf Registration Programme Tranche I of IDR2,000.0 billion 164
167. REGIONAL DEBT DEALS (CONTINUED) Lembaga Pembiayaan Ekspor Indonesia IDR2,000.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche V of IDR26,000.0 billion PT Semen Indonesia (Persero) Tbk IDR4,078.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche II of IDR8,000.0 billion IDR1,058.6 billion Senior Bonds via 4th Shelf Registration Programme Tranche VII of IDR26,000.0 billion IDR1,661.5 billion Senior Bonds via 4th Shelf Registration Programme Tranche VIII of IDR26,000.0 billion IDR1,018.5 billion Senior Bonds via 4th Shelf Registration Programme Tranche VI of IDR26,000.0 billion and IDR150.0 billion Mudharabah Sukuk via 1st Shelf Registration Programme Tranche IV of IDR6,000.0 billion IDR3,857.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche IV of IDR26,000.0 billion and IDR441.0 billion Mudharabah Sukuk via 1st Shelf Registration Programme Tranche III of IDR6,000.0 billion PT Adira Dinamika Multi Finance Tbk IDR618.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche IV of IDR9,000.0 billion and IDR214.0 billion Mudharabah Sukuk via 3rd Shelf Registration Programme Tranche III of IDR1,000.0 billion IDR1,192.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche VI of IDR9,000.0 billion PT Bank Tabungan Negara (Persero) Tbk IDR4,144.0 billion Senior Bonds via 3rd Shelf Registration Programme Tranche II of IDR10,000.0 billion PT Federal International Finance IDR2,360.3 billion Bonds via 3rd Shelf Registration Programme Tranche V of IDR15,000.0 billion IDR1,500.0 billion Bonds via 4th Shelf Registration Programme Tranche I of IDR15,000.0 billion PT Bank CIMB Niaga Tbk IDR2,000.0 billion Mudharabah Sukuk via 1st Shelf Registration Programme Tranche II of IDR4,000.0 billion IDR1,823.0 billion Senior Bonds via 3rd Shelf Registration Programme Tranche I of IDR6,000.0 billion and IDR83.0 billion Subordinated Bonds via 1st Shelf Registration Programme Tranche I of IDR2,000.0 billion PT Indosat Tbk IDR1,500.0 trillion Senior Bonds via 3rd Shelf Registration Programme Tranche I of IDR7,000.0 trillion and IDR500.0 billion Ijarah Sukuk via 3rd Shelf Registration Programme Tranche I of IDR3,000.0 trillion IDR2,587.0 billion Senior Bonds via 3rd Shelf Registration Programme Tranche II of IDR7,000.0 billion and IDR794.0 billion Ijarah Sukuk via 3rd Shelf Registration Programme Tranche II of IDR3,000.0 billion PT Permodalan Nasional Madani (Persero) IDR2,000.0 billion Senior Bonds via 3rd Shelf Registration Programme Tranche I of IDR6,000.0 billion IDR1,350.0 billion Senior Bonds via 3rd Shelf Registration Programme Tranche II of IDR6,000.0 billion PT Waskita Beton Precast Tbk IDR500.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche I of IDR2,000.0 billion PT Astra Sedaya Finance IDR2,225.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche II of IDR8,000.0 trillion IDR1,556.7 billion Senior Bonds via 4th Shelf Registration Programme Tranche 3 of IDR8,000.0 billion IDR1,500.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche II of IDR2,000.0 billion PT Bank Danamon Indonesia Tbk IDR2,000.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche I of IDR5,000.0 billion 165
168. regional notable deal REGIONAL DEBT DEALS (CONTINUED) PT Mandiri Tunas Finance IDR2,000.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche II of IDR3,000.0 billion PT JACCS Mitra Pinasthika Mustika Finance Indonesia IDR664.0 billion Senior Bonds I THB12.2 billion Senior Unsecured Debenture IDR1,000.0 billion Senior Bonds via 4th Shelf Registration Programme Tranche I of IDR3,000.0 billion PT Indonesia Infrastructure Finance IDR1,500.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche I of IDR3,000.0 billion PT XL Axiata Tbk IDR634.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche II of IDR5,000.0 trillion and IDR640.0 billion Ijarah Sukuk via 2nd Shelf Registration Programme Tranche II of IDR5,000.0 billion PT Tower Bersama Infrastructure Tbk IDR750.0 billion Senior Bonds via 3rd Shelf Registration Programme Tranche III of IDR7,000.0 billion True Corporation Public Company Limited THB8.5 billion Senior Unsecured Debenture PT Bank Pembangunan Daerah Jawa Barat Dan Banten Tbk IDR248.0 billion Senior Bonds via 1st Shelf Registration Programme Tranche III of IDR3,500.0 billion True Move H Universal Communication Co., Ltd. THB29.5 billion Senior Unsecured Debenture THB22.9 billion Senior Unsecured Debenture Ananda Development PCL THB4.0 billion Senior Unsecured Debenture THB2.5 billion Senior Unsecured Debenture THB14.0 billion Senior Unsecured Debenture Toyota Leasing (Thailand) Co., Ltd. THB6.0 billion Senior Secured Debenture TPI Polene Power PCL THB4.0 billion Senior Unsecured Debenture THB8.0 billion Senior Secured Debenture THB8.0 billion Senior Secured Debenture R E G I O N A L L OA N SY N D I CAT I O N D E A L S PT Chandra Sakti Utama Leasing Syndicated Term Financing of USD130.0 million 166 Kulim (Malaysia) Berhad Syndicated Term Financing-i Facility of up to RM1.5 billion
169. notable MSWG-ASEAN CORPORATE GOVERNANCE AWARDS 2018 • Industry Excellence Award – Finance (1st place) • Excellence Award for CG Disclosure (1st place) • Excellence Award for Overall CG & Performance (4th place) MALAYSIA E-PAYMENTS EXCELLENCE AWARDS (MEEA) 2019 • Best E-Payment Bank • Best IBFT Bank • MyDebit Market Expansion ALPHA SEA REGIONAL ISLAMIC FINANCE AWARD 2019 • Best Islamic Finance Sukuk House • Best FX Bank for Corporate Islamic Treasury THE ASSET TRIPLE A ISLAMIC FINANCE AWARDS 2019 • Best Exchangeable Sukuk • Best Sovereign Sukuk/Best Green Sukuk • Best Corporate Sukuk • Best Unrated Sukuk • Best Local Currency Sukuk • Best Islamic Project Finance Deal • Power Deal of the Year – Malaysia • Transport Deal of the Year – Malaysia ALPHA SEA BEST FINANCIAL INSTITUTION AWARDS 2019 EUROMONEY AWARDS FOR EXCELLENCE ASIA 2019 • Best Cash Management Bank in Malaysia • Best Equity House in Malaysia • Best Institutional Broker in Malaysia • Malaysia’s Best Investment Bank THE ASIAN BANKER EXCELLENCE IN RETAIL FINANCIAL SERVICES AWARDS 2019 • Best Digital Bank in Malaysia • Best Retail Bank in Malaysia • Retail Banker of the Year in Asia Pacific 2019 – Samir Gupta GLOBAL FINANCE WORLD'S BEST ISLAMIC FINANCIAL INSTITUTIONS AWARDS 2019 • Best Sukuk Bank • Best Islamic Trade Finance Provider • Best Islamic Bank CSR NEXT-GEN CUSTOMER EXPERIENCE IN FINANCIAL SERVICES AWARDS 2019 • Excellence Net Promoter Score • Best Customer Experience – Branch • Best Customer Experience Business Model (Highly Acclaimed) • Best Use of Customer Feedback (Highly Acclaimed) • Best Client On-Boarding Initiative (Highly Acclaimed) • Best Use of Data Analytics (Highly Acclaimed) • Best Customer Experience – Contact Centre (Highly Acclaimed) FINANCEASIA COUNTRY AWARDS 2019 • Best Investment Bank – Malaysia • Best DCM House – Malaysia • Best ECM House – Malaysia • Best Private Bank – Malaysia FINANCEASIA HOUSE AWARDS 2019 • Islamic Finance House of the Year ALPHA SEA 13TH DEAL & SOLUTION AWARDS 2019 • Best Bond House in Southeast Asia • Best Islamic Finance Deal in Southeast Asia • Best Islamic ABS-Backed Sukuk • Best Secondary Deal & Best Convertible Securities in Southeast Asia • Best Refinancing Deal in Southeast Asia NATIONAL ANNUAL CORPORATE REPORT AWARDS (NACRA) 2019 • Most Outstanding Annual Report of the Year – Platinum • Industry Excellence Awards – Finance • Inclusiveness and Diversity Reporting Award – Silver • Best Designed Annual Report – Gold 167
170. corporate event 3-4 January 2019 CIMB 11th Annual Malaysia Corporate Day , Mandarin Oriental Kuala Lumpur. 18 February 2019 6 March 2019 168 25 February 2019 CIMB Islamic & SimplySiti Press Conference, Menara CIMB KL Sentral. Chinese New Year Lion Dance Performance, Menara CIMB KL Sentral. An Evening with Maher Zain, Hilton Kuala Lumpur. 21 April 2019 CIMB Cycle @ Putrajaya.
171. 22 April 2019 CIMB Group ’s 62nd Annual General Meeting, Sime Darby Convention Centre. 23 May 2019 Majlis Berbuka Puasa CIMB Group, Masjid Ar-Rahah. 30 May 2019 CIMB Foundation Hari Raya Shopping with underprivileged children, Mydin Kuantan. 26 June 2019 CIMB Hari Raya Open House, The St. Regis Kuala Lumpur. 23 July 2019 1 & 2 October 2019 Konser Kerja Mimpi Untuk Indonesia Jakarta, Jakarta Convention Center. The Cooler Earth – Sustainable Finance Summit, Plenary Hall, KLCC. 23-27 September 2019 CIMB Young Asean Leaders, UKM Bangi. 23 November 2019 The Music Run, KL Sports City (Bukit Jalil Stadium). 169
172. media 2 October 2019 The Edge Financial Daily 23 April 2019 8 April 2019 New Straits Times 21 February 2019 26 September 2019 New Straits Times The Sun CIMB Bank appoints Victor Lee Meng Teck as Singapore CEO 2 January 2020 The Edge Markets 25 March 2019 Borneo Post (Kuching) 29 November 2019 New Sabah Times English (KK) The Edge Financial Daily CIMB Cycle 2019 7 January 2019 Borneo Post (Kuching) CIMB Foundation – CIMB Young ASEAN Leaders Sharing Session with Tengku Dato’ Sri Zafrul Tengku Abdul Aziz 30 September 2019 170 The Edge Financial Daily 11 March 2019 The Edge CIMB Islamic and Takaful IKHLAS aim for RM168 million, 11% YoY growth through strategic partnership 19 August 2019 China Press 22 April 2019 The Edge Financial Daily 26 September 2019 The Edge Financial Daily
173. CIMB Foundation ’s Hari Raya Shopping programme 18 October 2019 30 January 2019 New Straits Times 31 May 2019 China Press (East Coast) The Business Times (Singapore) #KejarMimpi Leaders Camp Jakarta 17 June 2019 The Edge 27 September 2019 Suara Pembaruan CIMB Islamic wins Best Islamic Bank at IFN Awards 9 December 2019 Ekonomi Neraca CIMB Bank PLC Wins Cambodia’s Best International Bank 2018 Award 1 March 2019 New Straits Times 25 March 2019 The Edge Financial Daily CIMB Thai announces 2020 strategy 29 April 2019 3 January 2019 Sabay 22 November 2019 Borneo Post (Kuching) Berita Harian 26 December 2019 Money and Banking CGS-CIMB Securities Sdn Bhd commences operations in Malaysia 29 April 2019 19 December 2019 CIMB Group presents The Music Run Kompas Borneo Post (Kuching) 2 July 2019 China Press 23 April 2019 New Straits Times 21 June 2019 The Star 171
174. shareholders ’ as at 1 March 2020 Issued and Paid-up Share Capital : RM25,843,808,000 comprising 9,992,996,350 ordinary shares Class of Shares : Ordinary shares Voting Rights : One vote per ordinary share A N A LYS I S O F S H A R E H O L D I N G S ( A S P E R T H E R E C O R D O F D E P O S I T O R S ) No. of Shareholders % of Shareholders No. of Shares % of Issued Shares 2,948 4.45 99,680 0.00 100 – 1,000 25,036 37.79 11,044,758 0.11 1,001 – 10,000 28,660 43.26 106,214,184 1.07 10,001 – 100,000 7,936 11.98 208,527,773 2.10 100,001 – 496,148,316(*) 1,674 2.53 5,482,176,676 55.25 496,148,317 and above(**) 3 0.00 4,114,903,279 41.47 Director holding 0 0.00 0 0.00 66,257 100.01 9,922,966,350 100.00 Size of Shareholdings 1 – 99 Total Notes: *¹ Less than 5% of issued holdings. *² -5% and above of issued holdings. *³ Less than 0.01%. *4 Excludes 4,908 shares retained as treasury shares as at 1 March 2020. A N A LYS I S O F E Q U I T Y S T R U C T U R E ( A S P E R T H E R E C O R D O F D E P O S I T O R S ) No. of Holders No. of Shares Malaysian Category of Shareholders 1)Individual 2) Body Corporate A)Banks/Finance Companies B)Investments Trusts/ Foundation/ Charities C) Other Types of Companies 3)Government Agencies/Institutions 4)Nominees 5)Trustee 6)Others Grand Total 172 % Malaysian NonBumiputra Bumiputra Foreign Bumiputra NonBumiputra Foreign Malaysian NonBumi- Bumiputra putra Foreign 8,324 43,545 885 21,203,149 283,841,928 14,228,792 0.21 2.86 0.14 73 5 0 1,946,148,421 773,551 0 19.61 0.01 0.00 0 7 0 0 599,620 0 0.00 0.01 0.00 67 539 26 2,364,082,005 63,277,333 24,261,843 23.82 0.64 0.24 4 0 0 31,179,190 0 0 0.31 0.00 0.00 7,146 4,015 1,621 299,808,127 1,899,846,675 2,973,715,716 3.02 19.15 29.97 0 0 0 0 0 0 0.00 0.00 0.00 0 0 0 0 0 0 0.00 0.00 0.00 15,614 48,111 2,532 4,662,420,892 2,248,339,107 3,012,206,351 46.97 22.67 30.35 66,257 9,922,966,350 99.99
175. DIRECTORS ’ SHAREHOLDINGS (AS PER THE REGISTER OF DIRECTORS’ SHAREHOLDINGS) No. of Shares Held Direct Interest %*¹ Deemed Interest Tengku Dato’ Sri Zafrul bin Tengku Abdul Aziz 1,780,558 0.02 – Dato’ Lee Kok Kwan 1,205,072 0.01 88,648 %*¹ – –*² Notes: *¹ Excludes 4,908 shares retained as treasury shares as at 1 March 2020. *² Less than 0.01%. S U B S TA N T I A L S H A R E H O L D E R S ( A S P E R T H E R E G I S T E R O F S U B S TA N T I A L S H A R E H O L D I N G S ) No. of Shares Held Name of Substantial Shareholders Direct %*¹ Indirect %*¹ Khazanah Nasional Berhad 2,358,894,374 23.77 – – Employees Provident Fund 1,322,121,341 13.32 – – 591,190,821 5.96 – – Kumpulan Wang Persaraan (Diperbadankan) Notes: *¹ Excludes 4,908 shares retained as treasury shares as at 1 March 2020. *² Includes shares held through nominees. 3 0 L ARGEST SHAREHOLDERS (AS PER REGISTER OF MEMBERS AND RECORDS OF DEPOSITORS) Name of Shareholders No. of Shares Held % of Issued Capital*¹ 1. Khazanah Nasional Berhad 2,358,894,374 23.77 2. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board 1,164,818,084 11.74 3. Kumpulan Wang Persaraan (Diperbadankan) 591,190,821 5.96 4. Amanahraya Trustees Berhad Amanah Saham Bumiputera 483,995,262 4.88 5. Amanahraya Trustees Berhad Amanah Saham Malaysia 2 – Wawasan 232,711,556 2.35 6. Amanahraya Trustees Berhad Amanah Saham Malaysia 174,825,338 1.76 7. HSBC Nominees (Asing) Sdn Bhd SBL Exempt An for J P Morgan Securities Plc 124,844,631 1.26 8. Citigroup Nominees (Asing) Sdn Bhd CBHK for Fubon Life Insurance Co., Ltd (CTL) 118,189,200 1.19 9. HSBC Nominees (Asing) Sdn Bhd JPMCB NA for Vanguard Total International Stock Index Fund 117,833,930 1.19 10. Cartaban Nominees (Asing) Sdn Bhd GIC Private Limited for Government of Singapore (C) 109,038,388 1.10 173
176. shareholders ’ statistics as at 1 March 2020 Name of Shareholders 11. Amanahraya Trustees Berhad Amanah Saham Bumiputera 2 12. No. of Shares Held % of Issued Capital*¹ 107,489,197 1.08 HSBC Nominees (Asing) Sdn Bhd HSBC BK PLC for The Prudential Assurance Company Limited (OBA ESI) 104,334,350 1.05 13. HSBC Nominees (Asing) Sdn Bhd JPMCB NA for Vanguard Emerging Markets Stock Index Fund 103,797,038 1.05 14. HSBC Nominees (Asing) Sdn Bhd SBL Exempt An For Credit Suisse Securities (Europe) Limited 103,487,016 1.04 15. Cartaban Nominees (Tempatan) Sdn Bhd PAMB for Prulink Equity Fund 101,440,874 1.02 16. Cartaban Nominees (Asing) Sdn Bhd Exempt An For State Street Bank & Trust Company (West CLT OD67) 95,485,912 0.96 17. Citigroup Nominees (Tempatan) Sdn Bhd Great Eastern Life Assurance (Malaysia) Berhad (PAR 1) 86,985,945 0.88 18. Amanahraya Trustees Berhad Amanah Saham Malaysia 3 79,141,233 0.80 19. CGS-CIMB Nominees (Tempatan) Sdn Bhd RSS/SBL Exempt An for CGS-CIMB Securities Sdn Bhd 77,267,818 0.78 20. DB (Malaysia) Nominee (Asing) Sdn Bhd BNYM SA/NV for Eastspring Investments – Asian Equity Fund 73,703,582 0.74 21. Citigroup Nominees (Tempatan) Sdn Bhd Exempt An for AIA Bhd. 71,258,066 0.72 22. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (Nomura) 59,655,951 0.60 23. Permodalan Nasional Berhad 54,280,113 0.55 24. Citigroup Nominees (Asing) Sdn Bhd CBNY for Dimensional Emerging Markets Value Fund 52,637,782 0.53 25. Citigroup Nominees (Asing) Sdn Bhd Exempt An for Citibank New York (Norges Bank 14) 51,166,453 0.52 26. HSBC Nominees (Asing) Sdn Bhd JPMBL SA for Stichting Depositary APG Emerging Markets Equity Pool 48,451,834 0.49 27. HSBC Nominees (Asing) Sdn Bhd JPMBI for UBS (IRL) Investor Selection Public Limited Company – Global Equity Long Short Fund 46,217,317 0.47 28. Citigroup Nominees (Tempatan) Sdn Bhd Great Eastern Life Assurance (Malaysia) Berhad (PAR 3) 41,874,595 0.42 29. Citigroup Nominees (Asing) Sdn Bhd Exempt An for Citibank New York (Norges Bank 1) 37,629,671 0.38 30. Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad for Public Regular Savings Fund (N14011940100) 36,738,247 0.37 6,909,384,578 69.65 Total Note: *¹ Excludes 4,908 shares retained as treasury shares as at 1 March 2020. 174
177. internal policies , procedures Policies are formulated to govern standard day-to-day operations and to manage the expected risks of CIMB Group. As such, the Group’s policies are developed from the baseline of current regulatory requirements and industry best practices to govern the business and operations of the Group. The policies of our business units have been documented, endorsed by the Group Risk Committee (GRC) or its sub-committee(s) and approved by our Board or Board Risk Committee for implementation across our Group, where relevant. Operational procedures are approved by Group Policy & Procedure Oversight Committee (GPOC) for implementation. Approved policies and procedures are timely disseminated to affected stakeholders. Reviews and updates are performed regularly on approved policies, procedures and guidelines. This is done with the intent to ensure continuous improvements in operational efficiency while taking into consideration the changing industry profile on regulatory requirements, risks and internal control measures for mitigation, and new products and services. Listed below are some of the Group’s key policies and procedures: No. Title Description 1. a) Group Administration & Property Management Malaysia Policy b) Group Administration & Property Management Malaysia Procedure These documents relate to the administrative operations of the Group and covers the operational policies governing procurement, property, maintenance services, security services, logistics, telecommunications, insurance and occupational safety and health administration. 2. a) Accounting Policy b) Group Finance – Business Finance Advisory & Financial Reporting Standards Procedures c) Accounting Procedure – Hedge Accounting These documents define the accounting concepts and policies that are consistent with Malaysia Financial Reporting Standards and Generally Accepted Accounting Practices. 3. Group Outsourcing Policy This document sets out how outsourcing arrangements in the Group are managed across the lifecycle of the arrangement to ensure proper controls in place in managing outsourcing risk. 4. a) Business Continuity Management Policy b) Business Continuity Management Procedure These documents provide the policies and procedures in responding to a disruption, crisis and/or disaster and to resume critical business functions. 5. Group Corporate Communications This document sets out the framework for the dissemination of information by the Group to its shareholders, media and other stakeholders. Information given by the Group to the general public shall always be timely, accurate, relevant and reliable so as to enable a properly informed view of how the Group is governed, its financial and operational performances, future prospects and key corporate developments. 6. Group Crisis Communications Guidelines Crises affect organisations in varying degrees and frequency. The challenge for the affected organisation is to manage these crises well in order to get back to the business of running the organisation as quickly as possible. CIMB Group has a Crisis Communications Guide to aid effective response and communication with affected stakeholders in a timely and consistent manner. It defines crisis, crisis classification, escalation procedures, and the establishment of a crisis communication management team and centre. 7. a) Group Data Management Policy Manual b) Group Data Management Procedure These policies and procedures enable a structured approach to the management of data and dissemination of information throughout CIMB Group. The manual spells out the data governance and management information system frameworks. 175
178. internal policies , procedures and guidelines No. Title Description 8. a) Group Anti-Money Laundering/ Counter Financing of Terrorism Policy b) Group Anti-Money Laundering/ Counter-Financing of Terrorism Procedure CIMB Group places importance on, and is committed to establishing an effective internal control system for AML/CFT in compliance with all related laws, regulations, guidelines and industry best practices. The Group AML/CFT policies encompasses all reporting institutions of CIMB Group, to ensure consistency in managing the AML/CFT compliance. The manual governs the appointment of anti-money laundering compliance officers, the monitoring and reporting of suspicious transactions, sanction management, record retention, employee training, risk and status reporting to Board and Senior Management and an independent audit of the internal AML/CFT measures. 9. Recruitment Policy This document sets out the terms of employment for CIMB employees. These include recruitment terms such as emolument, retirement, working days and hours, office wear, conduct and discipline. The handbook sets out employment benefits including allowances and claims, medical benefits, benefits-in-kind, leave, and employee loans. 10. Risk Management of Travel Policy This document addresses flight travel for staff in order to minimise the potential risks to CIMB Group in terms of continuity of leadership and operations. The policies cover senior management, staff at department levels and staff in general. 11. Policy & Procedure on Fit and Proper Criteria For Key Responsible Persons This document sets out the procedures on Fit and Proper assessment for key responsible persons who are accountable or responsible for the management and oversight of the entities in the Group regulated by Financial Services Act 2013, Islamic Financial Services Act 2013 and Insurance Act 1996. These comprise Directors, members of the Shariah Committee, Chief Executive Officers/Executive Directors, any person performing a senior management function who has the primary or significant responsibility for the management and performance of significant business activities; and any person who has primary or significant responsibility of key control functions. 12. Staff Rejuvenation Programme This document sets out the rules and guidelines to allow staff to take a break from work without any loss in service or disadvantage in career progression. 13. HR Policy on Staff Volunteerism This document sets out the rules and guidelines to encourage staff to volunteer for CSR activities funded by CIMB Foundation. The policies provide recognition of time spent by staff on CSR activities. This is part of CIMB Group’s effort to enhance community projects by contributing expertise, energy, enthusiasm and efforts of staff. Seven days of volunteering entitles staff to one day of annual leave in the following year. 14. Staff Welfare Fund The Staff Welfare Fund is established to provide financial assistance to our staff and their family members to cope with high medical expenses, as a result of being involved in an accident or due to serious illness. The fund is also used to assist in loss/damage of property due to natural disasters e.g. fire/flood. 15. Sexual Harassment Policy & Guidelines These documents set out the policies and guidelines to maintain a working environment which is free of sexual coercion and annoyance. CIMB Group is committed to ensure that all employees are protected from harassment of any kind and in particular from sexual harassment. The policy covers all CIMB Group employees including contract and temporary employees. 16. Whistle Blowing Policy This document is in place to ensure CIMB Group has a disciplined and professional workforce. Under this policy, employees are required to promptly report incident of wrongdoings, malpractices or irregularities at their workplace to the Management for immediate rectification and action and the Management is committed to ensure strict confidentiality and will not only protect the identity of the complainants and will also protect the complainant from any harassment and victimisation at work due to the disclosure. 17. Anti Bribery and Corruption Policy This document sets out policy matters relating to the prevention of bribery and corruption, and sets out the responsibilities of Group employees and associated persons working for and on behalf of the Group, in observing and upholding the Group’s position on anti-bribery and corruption. 176
179. No . Title Description 18. Global Employee Mobility Policy This document sets out the terms, benefits and guidelines for CIMB employees deployed on regional secondments. This is part of CIMB Group’s effort to encourage movement of talent across borders for business and/or talent development purposes. 19. a) Group Conflict Management & Chinese Wall Policy b) Group Conflict Management & Chinese Wall Procedure These documents consolidated the Group Chinese Walls Policy and Procedures and the Group Conflict Management Policy and Procedures. The revised policy is to prescribe standards, outline the requirements and provide guidance to ensure processes and controls are in place in order to identify and manage any conflict or when potential conflict of interest situation arises. The Personal Account Dealing (PAD) sections that were previously provided by the Group Conflict Management Policy and Procedures remain valid until the new standalone PAD Policy and Procedures is approved. 20. a) Shariah Advisory and Board Shariah Committee Secretariat Policy b) Shariah Advisory and Board Shariah Committee Secretariat Procedure These documents define and explain the overall framework applicable to the Islamic businesses of CIMB Group so that they can be conducted in the most effective manner and in line with the Shariah and the regulations of Bank Negara Malaysia (BNM), Securities Commission (SC), the rulings of both Shariah Advisory Councils of BNM and SC (SAC) and the rulings of Group Shariah Committee. Wherever appropriate, reference will also be made to the Shariah rulings issued by the Shariah authorities in other jurisdictions such as Dewan Shariah Nasional, Majelis Ulama Indonesia (DSN-MUI), the Shariah Committee at Authoriti Monetari Brunei Darussalam etc. based on the jurisdictional and locality requirements applicable to regional Islamic businesses of CIMB Group. 21. a) Group T&M – General Policy b) Group T&M – General Procedure These documents define the policies and procedures on activities carried out by Treasury & Markets department in relation to the Group’s markets, sales and trading businesses in interest rates, credit, foreign exchange, commodities, equities and their derivatives, debt capital markets, fixed income investments, and treasury and funding operations for the Group. 22. a) Group Fraud Management Policy b) Group Fraud Risk Governance and Procedure These documents set out clear directives and guidelines on CIMB Group’s fraud risk governance framework. It provides guideline on the parties responsible to (i) instantly respond to a fraud/suspected fraud incident; (ii) take measures to recover or prevent from further loss of funds and limit any adverse publicity that potentially results in reputation damage; (iii) take necessary actions to strengthen the operational policies and procedures, including systems, whenever a fraud/suspected fraud has occurred either within the CIMB Group or the Industry. 23. a) IT Infrastructure and Service Policy b) Disaster Recover Policy c) IT General Control Policy d) Information Security Policy (E-Banking, Digital & Internet Application Policy + Cyber Security Policy + Information Security Policy) e) Group System Development Policy f) End User Computing Policy (Desktop & Mobility) g) Bring Your Own Device (BYOD) Policy h) IT Service Management Policy i) IT Project Management Policy These documents govern all aspects of information technology within the Group and provides Management with direction and support in accordance with relevant laws, regulations and business requirements. It is designed to increase adherence to regulatory and internal requirements and ensures consistency in the Group’s standards of operations and practices whilst at the same time facilitating sharing of information across the Group and improved controls across the Group when managing information technology. These are global best practices and in accordance with global standards such as COBIT, ITIL, CMMi, ISO etc. This document has been standardised across the Region to facilitate a Regional Operating Model. 177
180. internal policies , procedures and guidelines No. Title Description 24. a) Technology Risk Management Policy b) Technology Risk Management Procedure These documents provide a consistent and unified approach for developing, managing and improving technology (including Cyber) risk management within the Group’s business operations. It comprises of a systematic method to identify, analyse, evaluate, treat, monitor and communicate technology risks associated with any activity, function or process, thereby protecting the Group by minimising its losses. 25. a) Group Compliance Policies b) Group Compliance Procedures These documents are to establish a compliance programme framework to ensure compliance with relevant laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct applicable to its regulated and licenced activities that govern the overall working of the business and support units within CIMB Group. 26. a) Group Competition Law Policy b) Group Competition Law Procedure The Malaysian Competition Act came into force in 2012 and has changed the business landscape in Malaysia and affected the way all Malaysian businesses operate. The Competition Law Manual provides an overview of the Competition Act and guides all business units within the Malaysian banking entities of CIMB Group to familiarise and understand the competition laws of Malaysia. It is a general guide on anti-competitive conduct, anti-competitive agreements and compliance reporting of any violations or breach of the Malaysian Competition Act. 27. Group Liquidity Risk Management Policy This is the primary reference document on matters relating to the key principles for the liquidity risk management framework of banking entities within CIMB Group. The policy sets out key approaches and critical areas for an integrated liquidity risk management process including liquidity risk strategies, management oversight, roles and responsibilities of various divisions/departments, risk controls and monitoring procedures to ensure that the Group has sufficient liquidity to meet its obligations as they fall due. Group’s contingency funding plan is in place to alert and to enable the management to act effectively and efficiently during a liquidity crisis and under adverse market conditions. 28. Group Reputation Risk Policy The policy sets out the Group’s approach to identifying and managing its reputation risks within board set appetite. The policy leverages off existing Operational Risk Management tools and provides additional oversight and monitoring through a Group Operational & Resiliency Risk Committee (GORRC). 29. Group Credit Risk Policy (with Islamic addendum) These documents set out the broad Credit and Financing Policies, applicable to the CIMB Group Conventional and Islamic Banking businesses, with the purpose to establish the discipline for orderly extension of credit and financing activities. 30. a) CIMB Group Personal Data Protection Policy b) CIMB Group Personal Data Protection Procedure These documents outline the requirements of the Personal Data Protection Act 2010 (PDPA) and is intended to assist CIMB Group in meeting its statutory responsibilities as detailed in the PDPA. It serves as a general guide to the PDPA and CIMB Group’s related processes and obligations to ensure that all staff within the relevant entities/ divisions of the Group in Malaysia is familiar with, understand and comply with the personal data protection laws of Malaysia. 31. a) Group Shariah Review Policy b) Group Shariah Review Procedure These documents define and explain the overall Shariah compliance review framework applicable to the Islamic banking and finance businesses of CIMB Group to ensure Shariah compliance and handle Shariah non-compliance events. 178
181. No . Title Description 32. CIMB Group Enterprise-Wide Risk Management (EWRM) Framework This describes the policies, guidelines and methodologies for managing risk across the Group. It provides guidance to the risk management teams towards achieving a common platform and consistent approach to risk management across the Group; provides an overview of each identified risk to promote clear and accountable risk management processes; and facilitates readiness and compliance to Bank Negara Malaysia and other regulatory requirements. 33. Group Market Risk Policy This policy prescribes a consistent Group-wide framework to manage market risk across all CIMB entities. It serves as a primary reference document for the Group in establishing a sound operating environment for market risk activities that is consistent with the governance and control standards of the Group Risk Appetite Statement. 34. Group Operational Risk Management Policy This policy sets out the Group’s approach in managing operational risk. The policy sets out the tools used by the first line of defence to identify, assess, manage and report their operational risks. 35. Group Interest Rate Risk/Rate of Return In Banking Book Policy This is the Group’s primary reference document on the key principles for the interest rate risk management for the non-traded books. This policy also sets out the approving authority of risk policies, Board and management oversight, roles and responsibilities of divisions/departments, risk measurement methodologies, risk controls, monitoring and reporting procedures to ensure that the interest rate risk arising from the Group operations is properly identified, measured, monitored and managed over a range of potential changing interest rate environments including stress conditions. 36. a) CIMB Group Shariah Risk Management Policy a) b) CIMB Group Shariah Risk Management Procedures b) This document articulates the objectives, mission, guiding principles, governance structure as well as methodology and approach adopted by the Group in managing Shariah Non-Compliance (SNC) risk. This document provides explanation/illustration that could facilitate the Group in identifying, assessing, controlling and monitoring SNC risk inherent in its Islamic products and day-to-day activities. 37. Group Credit Risk Policy This Policy sets out the credit risk guiding principles for application across the Group to ensure consistency in its credit risk management activities. 38. Group New Product Approval Procedure This Policy sets out a consistent framework to risk manage the launch of new and varied products. New products will be subjected to a robust internal approval process that requires objective review and appropriate senior management sign off before they are offered to customers or investors. 39. Group Retail Credit/Financing Policy This Policy is an overarching group policy which governs the credit aspects of Retail lending business. It applies to major retail lending products such as Property Financing, Vehicle Financing, Credit Cards and other revolving credit facilities, secured and unsecured term financing, for CIMB retail banking in all the countries where CIMB is present. 40. Group Internal Capital Adequacy Assessment Process (ICAAP) Policy This Policy describes the policies aspects of ICAAP for all entities within CIMB Group. It ensures adequate policies are in place for efficient and proper conduct of ICAAP across various divisions within the Group. The Policy also sets out the key ICAAP requirements which include assessing the risk profile of the bank, assessing capital adequacy, monitoring compliance with regulatory requirement on capital adequacy, reporting to management and regulator on ICAAP and ICAAP governance and independent review. 179
182. internal policies , procedures and guidelines No. Title Description 41. a) Group Delegated Authority Policy b) Group Delegated Authority Procedure These documents set out the nature and extent of the authority formally delegated from the CIMB Group Holdings Berhad’s Board of Directors. The contents cover both financial approval and document execution. This policy does not apply to delegated credit and human resource authorities which are covered separately by the respective Divisions’ policies. 42. Group Internal Audit Policy Manual This document sets out the policies, strategies and detailed procedures of GIAD in order to deliver an efficient and effective internal audit service (including investigation) in congruence with the goals of the CIMB Group of Companies. 43. a) Group Entity Governance Policy b) Group Entity Governance Procedure These documents are developed to put in place the minimum governance requirements for entities across the Group in terms of: • Directors’ and Responsible Officers’ requirements, roles and responsibilities • Management accountability • Committee structure and oversight • Adherence to Group Policies and Procedures • Inter-entity Service Level Agreements • Adherence to the Group Financial Booking Governance • Financial Delegation of Authority The Policy sets out how subsidiaries, joint-venture entities, associates and the like are governed by its parent and the apex entity, through (i) how the entities communicate with each other and (ii) the implementation of controls that are dependent on the entities’ categorisation. 44. a) Group Customer Experience Management – Complaints Handling Policy Manual b) Group Customer Experience Management – Complaints Handling Procedure Manual These documents set out the standard framework and mechanism when dealing with customers’ complaints regionally in accordance with regulatory and CIMB Group standards. This is to ensure prompt and constructive responses are given to Customer which in turn will build customer loyalty and confidence towards CIMB Group. 45. a) CIMB Group Customer Exit Handling Policy b) CIMB Group Customer Exit Handling Procedure These documents provide a common customer exit handling standards which are to be adhered to by all relevant business units and/or departments within CIMB Group entities, in order to effectively safeguard the reputation of the franchise and to mitigate associated negative impacts. 46. a) Group Customer Experience Management – Treating Customers Fairly Policy Manual b) Group Customer Experience Management – Treating Customers Fairly Procedure Manual These documents are established in line with BNM’s Market Conduct and Consumer Empowerment standards. It aims to inculcate the Treating Customers Fairly principles into the corporate culture of CIMB Group. a) Disclosure of Customer Information to Law Enforcement Agency Policy Manual b) Disclosure of Customer Information to Law Enforcement Agency Procedure Manual These documents describe the broad principles on disclosure of customer documents or information to law enforcement agency(ies) with the purpose to facilitate the investigation or prosecution by law enforcement agency(ies). It is established to provide a clear guidance on the circumstances that a disclosure of customer documents or information is permitted and the method of such disclosure is to be released to the Law Enforcement Agency. This is to ensure compliance with the guidelines issued by BNM on disclosure of customer information. 47. 180 It states the guidelines to be applied in managing and working towards fair treatment of customers and sets out the principles to ensure CIMB Group of employees comply with internal Treating Customers Fairly requirements.
183. top 10 properties of Tenure / Date of Expiry Remaining Lease (years) Age of Property (years) Net Book Value* (MYR) Year of Acquisition Date of Revaluation Location Description/Existing Use MENARA CIMB 1 Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia 40 storey office building with 6 storey of basement car park. Building majority occupied by CIMB Group of companies with partial lower zone leased out to 3rd party. Freehold n/a 5 700,000,000 2015 Dec-19 CIMBTHAI Langsuan Building 44 Langsuan Road, Lumpini Patumwan, Bangkok 10330 25 storey office building with 1 basement level. Premises occupied by CIMB Thai Bank (Head Office Branch), CIMB Thai Bank’s division offices and subsidiary company offices. Freehold n/a 20 281,914,822 1999 Sep-16 Menara Sentraya Lt. 28, 29, 30, 31, 32 Jl. Iskandarsyah No. 2 Melawai Blok M Jakarta Selatan 41 storey office building, CIMB Niaga owned 5 storey. Freehold n/a 3 125,767,9 82 2015 May-19 WISMA CIMB No. 11, Jalan 4/83A Off Jalan Pantai Baru 59200 Kuala Lumpur 7 storey office building together with 3 levels of basement car park. Building majority occupied by CIMB Bank with Ground floor leased out to 3rd party. Freehold n/a 12 120,998,526 2018 Aug-17 Wisma CIMB Niaga Jl. Gatot Subroto No. 2 Bandung 11 storey office building used as CIMB Niaga Head Office and some floors are rented to 3rd party. Leasehold expiring on 6 December 2023 4 29 74,148,181 2001 May-19 Jl. Gajah Mada 18 Jakarta Pusat 3 storey office building used as CIMB Niaga Head Office and Branch. Leasehold expiring on 17 January 2036 17 29 52,865,999 2006 May-19 CIMB Niaga Lippo Cikarang Jl. MH Thamrin Lippo Cikarang 8 storey office building used as CIMB Niaga Head Office and some floors are rented to 3rd party. Leasehold expiring on 5 May 2023 4 27 51,833,058 2012 May-19 Synergy Building Jl. Sutera Barat Kav 17 Alam Sutera, Serpong Tangerang, Banten 20 storey office bulding, CIMB Niaga owned 7 Floors (GF, UG, 1st, 2nd, 3rd, 5th, 6th), used as CIMB Niaga Branch and Head Office business support. Leasehold expiring on 3 April 2024 5 8 40,027,733 2014 May-19 CIMB Niaga Kebon Sirih Jl. Kebon Sirih 33 Jakarta Pusat CIMB Niaga Branch premises. Leasehold expiring on 22 August 2031 12 35 33,118,073 2003 May-19 Berita Satu Plaza Jl Gatot Subroto Kav 35-36, Jakarta Selatan CIMB Niaga owned 3 Floors (GF, 1st, 3rd), used as CIMB Niaga Branch and Head Office business support. Leasehold expiring on 31 March 2024 5 35 30,127,975 1997 May-19 181
184. corporate as at 1 March 2020 BOARD OF DIRECTORS Datuk Mohd Nasir Ahmad Chairperson /Independent Director Robert Neil Coombe Independent Director Afzal Abdul Rahim Independent Director Tengku Dato’ Sri Zafrul Tengku Abdul Aziz Group Chief Executive Officer/ Executive Director Dato’ Mohamed Ross Mohd Din Independent Director Didi Syafruddin Yahya Independent Director (Appointed on 7 May 2019) Teoh Su Yin Senior Independent Director GROUP COMPANY SECRETARY BOARD RISK AND COMPLIANCE COMMITTEE GROUP NOMINATION AND REMUNERATION COMMITTEE Datin Rossaya Mohd Nashir LS 0007591 Ahmad Zulqarnain Che On Non-Independent Director AUDIT COMMITTEE Dato’ Mohamed Ross Mohd Din Chairperson/ Independent Director Tongurai Limpiti Independent Director (Appointed on 7 May 2019) (Resigned on 30 December 2019) Datuk Mohd Nasir Ahmad Independent Director Teoh Su Yin Senior Independent Director Robert Neil Coombe Chairperson/Independent Director Teoh Su Yin Senior Independent Director Dato’ Mohamed Ross Mohd Din Independent Director Datuk Mohd Nasir Ahmad Independent Director Dato’ Lee Kok Kwan Non-Independent Director Ahmad Zulqarnain Che On Non-Independent Director Teoh Su Yin Chairperson/ Senior Independent Director GROUP SHARIAH COMMITTEE Datuk Mohd Nasir Ahmad Independent Director Dato’ Mohamed Ross Mohd Din Independent Director Ahmad Zulqarnain Che On Non-Independent Director Robert Neil Coombe Independent Director 182 Dato’ Lee Kok Kwan Non-Independent Director Dr Shafaai Musa Chairperson/Independent Member Sheikh Professor Dr Yousef bin Abdullah Al Shubaily Independent Member Sheikh Dr Nedham Yaqoobi Independent Member Associate Professor Dr Aishath Muneez Independent Member Ahmed Baqar Rehman Independent Member (Appointed on 1 June 2019) Didi Syafruddin Yahya Independent Director (Appointed on 7 May 2019) Sheikh Professor Dr Mohammad Hashim Kamali Independent Member (Contract Expired on 13 June 2019) Afzal Abdul Rahim Independent Director (Resigned on 31 July 2019) Dr Ahmad Sufian Che Abdullah Independent Member (Appointed on 1 November 2019)
185. REGISTERED OFFICE Level 13 , Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel: 603-2261 0085 Fax: 603-2261 0099 Website: www.cimb.com Investor Relations: ir@cimb.com Senior Independent Director: cimbSID@cimb.com Social media: www.facebook.com/ CIMBMalaysia www.twitter.com/CIMB_Assists www.instagram.com/ cimbmalaysia/ www.linkedin.com/company/cimb REGISTRAR Boardroom Share Registrars Sdn Bhd (199601006647 (378993-D)) 11th Floor Menara Symphony No. 5 Jalan Prof. Khoo Kay Kim Seksyen 13 46200 Petaling Jaya, Selangor Malaysia Helpdesk: 603-7890 4700 Fax: 603-7890 4670 E-mail address: info.my@ boardroomlimited.com GROUP MANAGEMENT Tengku Dato’ Sri Zafrul Tengku Abdul Aziz Country Head, Malaysia Group Chief Executive Officer & Chief Executive Officer/ Executive Director, CIMB Bank Berhad Tigor M. Siahaan Country Head, Indonesia President Director & Chief Executive Officer, PT Bank CIMB Niaga Tbk Victor Lee Meng Teck Country Head, Singapore Chief Executive Officer, CIMB Bank, Singapore Chief Executive Officer, Group Commercial Banking Adisorn Sermchaiwong Country Head, Thailand President & Chief Executive Officer/Executive Director, CIMB Thai Bank PCL Ahmad Shahriman Mohd Shariff Chief Executive Officer, Group Islamic Banking Chief Executive Officer/Executive Director, CIMB Islamic Bank Berhad Shahnaz Jammal Chief Executive Officer, Group Wholesale Banking Samir Gupta Chief Executive Officer, Group Consumer Banking Rafe Haneef Chief Executive Officer, Group Transaction Banking Effendy Shahul Hamid Chief Executive Officer, Group Ventures & Partnerships Gurdip Singh Sidhu Group Chief Strategy & Design Officer Khairul Rifaie Group Chief Financial Officer Omar Siddiq Group Chief Operating Officer AUDITORS STOCK EXCHANGE LISTING PricewaterhouseCoopers Level 10, 1 Sentral, Jalan Travers Kuala Lumpur Sentral PO Box 10192 50706 Kuala Lumpur Listed on Main Market of Bursa Malaysia Securities Berhad since 3 November 1987 Stock Code: 1023 Dato’ Hamidah Naziadin Group Chief People Officer Chief Executive Officer, CIMB Foundation David Richard Thomas Group Chief Risk Officer Kwan Keen Yew Group Chief Legal & Compliance Officer Amran Mohamad Group Chief Internal Auditor Datin Rossaya Mohd Nashir Group Company Secretary 183
186. group corporate CIMB Group Holdings Berhad Level 13 , Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com CIMB Bank Berhad Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com CIMB Investment Bank Berhad Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com CIMB Islamic Bank Berhad Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com PT Bank CIMB Niaga Tbk 16th Floor, Ji. Jend Sudirman Kav. 58 Graha CIMB Niaga Jakarta 12190, Indonesia Tel : 6221 250 5252 Fax : 6221 252 6749 Website : www.cimbniaga.com CIMB Thai Bank Public Company Limited 44, Langsuan Road Lumpini, Pathumwan Bangkok 10330, Thailand Tel : 662 638 8000/662 626 7000 Fax : 662 657 3333 Website : www.cimbthai.com 184 CIMB Bank Plc 20AB, Corner Preah Norodom Boulevard & Street 118 Sangkat Phsar Chas Phnom Penh 12203 Kingdom Of Cambodia Tel : 855 23 988 388 Fax : 855 23 988 099 Website : www.cimbbank.com.kh CIMB Bank (Vietnam) Limited Level 2, CornerStone Building 16 Phan Chu Trinh Hoan Kiem District Hanoi, Vietnam Tel : 84 4 3266 3388 Fax : 84 4 3266 3389 Website : www.cimbbank.com.vn CIMB Bank (L) Limited Level 14(A), Main Office Tower Financial Park Labuan Jalan Merdeka 87000 W P Labuan, Malaysia Tel : 6087 597 500 Fax : 6087 597501 Website : www.cimb.com CIMB Bank Berhad Singapore Branch #09-01, Singapore Land Tower 50, Raffles Place 048623 Singapore Tel : 65 6337 5115 Fax : 65 6337 5335 Website : www.cimb.com CIMB Bank Berhad London Branch Ground Floor, 27, Knightsbridge London SW1X 7LY United Kingdom Tel : 44 0 20 7201 3150 Fax : 44 0 20 7201 3151 Website : www.cimb.com CIMB Bank Berhad Shanghai Branch Unit 1805-1807, AZIA Center 1233, Lujiazui Ring Road Pudong New District Shanghai 200120, China Tel : 86 21 2026 1888 Fax : 86 21 2026 1988 Website : www.cimb.com CIMB Bank Berhad H o n g Ko n g B r a n c h 25th Floor, Gloucester Tower The Landmark, 15 Queen’s Road Central, Hong Kong Tel : 852 2586 7288 Fax : 852 2556 3863 Website : www.cimb.com CIMB Bank Berhad Philippines Branch Ground Floor, ORE Central Building 9th Avenue Corner 31st Street Bonifacio Global City, Taguig 1634 Philippines Tel : 63 2 249 9000 Fax : NIL Website : www.cimb.com CIMB Bank Berhad Labuan Offshore Branch Level 14(A), Main Office Tower Financial Park Labuan Jalan Merdeka 87000 W P Labuan, Malaysia Tel : 6087 597 500 Fax : 6087 597501 Website : www.cimb.com CIMB Investment Bank Berhad Brunei Branch 14th Floor, PGGMB Building Jalan Kianggeh Bandar Seri Begawan BS8111 Brunei Darussalam Tel : 673 224 1888 Fax : 673 224 0999 Website : www.cimb.com
187. CIMB Thai Bank Pcl Vientiane Branch 010 , Lanexang Avenue Unit 2, Ban Hatsadi Chanthabury District Vientiane, Lao Pdr Tel : 856 21 255 355 Fax : 856 21 255 356 Website : www.cimb.com Touch ‘N Go Sdn. Bhd. Tower 6, Avenue 5, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur, Malaysia Tel : 603 2714 8000 Fax : 603 2714 8001 Website : www.touchngo.com.my CIMB Trust Limited Level 14(A), Main Office Tower Financial Park Labuan Jalan Merdeka 87000 W P Labuan, Malaysia Tel : 6087 414 252 Fax : 6087 411 855 Website : www.cimb.com CIMB Islamic Trustee Berhad Level 21, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com CIMB Commerce Trustees Berhad Level 21, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com iCIMB (Malaysia) Sdn. Bhd. 19th Floor, Tower 5, Avenue 7 Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur, Malaysia Tel : 603 2180 7198 Fax : 603 2180 7100 Website : www.cimb.com iCIMB (MSC) Sdn. Bhd. 19th Floor, Tower 5, Avenue 7 Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur, Malaysia Tel : 603 2180 7198 Fax : 603 2180 7100 Website : www.cimb.com CIMB Foundation Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimbfoundation.com CIMB Bancom Capital Corporation 28th Floor, ORE Central Building 9th Avenue Corner 31st Street Bonifacio Global City Taguig, 1634 Philippines Tel : NIL Fax : NIL Website : www.cimb.com CIMB Bank Berhad Ya n g o n R e p r e s e n t a t i v e O f f i c e 1008, Level 10, Sakura Tower Kyauktada Township Yangon, Myanmar Tel : 951 8 255 430 Fax : 951 8 255 430 Website : www.cimb.com CIMB Bank Berhad Mumbai Representative Of fice Plot No.C-59, G - Block, Platina Office No. 603a, 6th Floor Bandra Kurla Complex Bandra (East), Mumbai 400051 Tel :91 22 6671 1570/ 91 02 2650 0330 Fax : NIL Website : www.cimb.com CIMB Investment Bank (Private) Limited Level 33, West Tower World Trade Centre, Echelon Square Colombo 01, Sri Lanka Tel : 94 11 234 8888 Fax : 94 11 244 1801 Website : www.cimb.com CGS-CIMB Holdings Sdn Bhd Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : 603 2261 8888 Fax : 603 2261 8899 Website : www.cimb.com CGS-CIMB Securities International Pte. Ltd. #16-02, Singapore Land Tower 50, Raffles Place 048623 Singapore Tel : 65 6225 1228 Fax : 65 6225 1522 Website : www.cimb.com 185
188. This page has been intentionally left blank .
189. CIMB GROUP HOLDINGS BERHAD 195601000197 (50841-W) CIMB GROUP HOLDINGS BERHAD ANNUAL REP ORT 2019 PERFORMANCE Strong balance sheet and top line growth across the region Page 18 FORWARD23 Great strides through Group-wide implementation with over 500 strategic projects Page 16 www.cimb.com SUSTAINABILITY Embedded economic, environmental and social considerations into our operations and lending policies Page 17 ANNUAL REPORT 2019 CUSTOMER CENTRICITY TECHNOLOGY & DATA OUR PEOPLE VENTURES & PARTNERSHIPS SUSTAINABILITY ADVANCING CUSTOMERS AND SOCIETY